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

• (132) The state’s presence and intervention in the financial markets as well as in the provision of raw materials and inputs further have an additional distorting effect on the market ⁷⁶. Thus, the state presence in firms, in the biodiesel and other sectors (such as the financial and input sectors) allows the GOC to interfere with respect to prices and costs.

3.2.1.4.   Significant distortions according to Article 2(6a)(b), third indent of the basic Regulation: public policies or measures discriminating in favour of domestic suppliers or otherwise influencing free market forces

• (133) The direction of the Chinese economy is to a significant degree determined by an elaborate system of planning which sets out priorities and prescribes the goals the central, provincial, and local governments must focus on. Relevant plans exist at all levels of government and cover virtually all economic sectors. The objectives set by the planning instruments are of a binding nature and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government.

• (134) Overall, the system of planning in China results in resources being driven to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces ⁷⁷.

• (135) The Chinese authorities have enacted several policies guiding the functioning of the sector of the product concerned.

• (136) For instance, the 14^th FYP on the development of bioeconomy ⁷⁸ sets the following objectives “[t]argeted selection, promotion and application of new oil and energy forest varieties with high yield, high resistance and fast growth, construction of bioenergy bases according to local conditions, strengthening thermochemical technology innovation, and promoting the application of high-efficiency and low-cost bioenergy. Carry out cellulosic ethanol, biodiesel, and bionatural gas industry demonstration sites in urban and rural areas where organic waste is concentrated […]. Carry out biodiesel promotion pilot projects in areas where conditions permit and promote the demonstration and application of bio-aviation fuel” ⁷⁹.

• (137) Furthermore, according to the 14^th FYP on renewable energy ⁸⁰, the GOC “[w]ill support the research, development and expansion of advanced technological equipment in bio-diesel and bio-kerosene production sectors” ⁸¹ and “[w]ill continue to promote the commercial applications of clean liquid fuels such as ethanol and bio-diesel, and based on scientific research on power generation and safety performance, we will expand the use of petrol and diesel in heavy vehicles, aeroplanes and ships” ⁸².

• (138) The 14^th FYP on science and technology innovation in energy ⁸³ aims to “[f]orm a technical system for the efficient synthesis/conversion of biomass as raw materials to produce transportation fuels/low-carbon energy products. [Demonstration and Testing] Develop and demonstrate a series of technologies such as efficient conversion of various types of biomass raw materials into ethanol, thermal conversion to produce fuel oil, and continuous thermochemical conversion of oils to produce biodiesel” ⁸⁴ and to “[c]arry out bio-liquid fuel project demonstrations such as bio-fuel ethanol, bio-diesel, bio-fuel [...]” ⁸⁵.

• (139) The Guidance Catalogue for the Industry Structural Adjustment (‘Guidance Catalogue’) directly addresses the sector of the product concerned by listing it as an encouraged industry, while vegetable oil-to-biofuel projects that are not in compliance with national plans and industrial policies are listed as a restricted one ⁸⁶.

• (140) The product concerned also benefits from tax support. First, biodiesel raw materials are included in the 2022 edition of the Catalogue of comprehensive use products and services benefitting from preferential VAT rates, with a tax refund rate of 70 % ⁸⁷. Second, the product concerned is also exempted from consumption tax ⁸⁸ when it meets the following conditions: “(1) The proportion of waste animal oil and vegetable oil in production raw materials shall not be less than 70 %. (2) The pure biodiesel produced complies with the national “Diesel Engine Fuel Blended Biodiesel (BD100)” standard” ⁸⁹ . Third, the enterprises benefit from a 90 % discount on the taxable income originating from biodiesel if the resources specified in the Catalogue of Enterprise Income Tax Incentives for Comprehensive Utilization of Resources (‘Income Tax Incentives Catalogue’) are used as the main raw materials ⁹⁰. In particular, the Income Tax Incentives Catalogue regulates biodiesel and industrial-grade mixed oil made from waste biomass oil and waste lubricating oil, requiring that “1. More than 90 % of the raw materials of the product come from the listed resources. 2. The product complies with national and industrial standards” ⁹¹.

• (141) On the province level, according to the Jiangsu 14^th FYP on the high-end development of chemical industry ⁹² the government authorities are set to shape the sector’s industrial layout as follows: “[p]romote the substitution of non-fossil energy and focus on promoting the large-scale application of biofuels, waste-derived fuels and other energy sources in key areas” ⁹³.

• (142) The biodiesel sector is heavily supported also by the Shanghai Municipality. The 2021 Shanghai Measures directly addresses the sector of the product concerned (see also recital (84)(91)). For instance, it sets a price formation mechanism: “B5 biodiesel preparation and sales enterprises purchase BD100 biodiesel from disposal enterprises according to the 0# diesel wholesale price announced by the city's price department (the 0# diesel wholesale price is the highest published retail price minus 300 CNY/tonne, the same below) […] When the wholesale price of 0# diesel is lower than 6 000 yuan/ton, municipal fiscal funds will subsidize the portion lower than 6 000 CNY/tonne to the disposal enterprise. During the implementation of emergency subsidies, disposal companies should purchase raw oil at a price of no less than 3 600 CNY/tonne” ⁹⁴. Furthermore, it regulates a Financial Support Policy: “[t]he municipal finance arranges funds to subsidize B5 biodiesel blending and sales enterprises based on 80 % of the actual discount compared with 0# diesel for B5 biodiesel sold at B5 biodiesel gas stations, floating gas stations and internal gas stations. […] Every time a B5 biodiesel blending and sales enterprise determines or adjusts the retail price of gasoline and diesel at gas stations, it must clearly stipulate the price of B5 biodiesel or the preferential margin compared with 0# diesel, and send a copy of the document to the relevant competent authorities. All gas stations should take the initiative to disclose the sales prices of 0# diesel and B5 biodiesel and accept social supervision. […] Financial subsidies are subject to total volume control, and the total application volume of subsidized B5 biodiesel shall not exceed 600 000 tonnes. If the volume generated, collected, transported, disposed, prepared and sold in this city indeed exceeds 600 000 tonnes, it must be jointly reviewed and reported to the Municipal Greening and City Appearance Bureau, Municipal Economic and Information Technology Commission, Municipal Market Supervision Bureau, Municipal Development and Reform Commission, and Municipal Finance Bureau. Adjustments will be made after the city government agrees” ⁹⁵. The subsidy funds involved in the above-mentioned measures are allocated from Shanghai’s special funds for energy conservation and emission reduction ⁹⁶.

• (143) The allocation of special funds for the promotion and application of biodiesel from waste kitchen oil in 2021, has benefitted, for instance, Sinopec Sales Co., Ltd. Shanghai Petroleum Branch – Biodiesel, that received a financial support of 129 million CNY ⁹⁷. In 2022, it received 152 million CNY ⁹⁸.

• (144) Through these and other means, the GOC therefore directs and controls virtually every aspect in the development and functioning of the sector, as well as the upstream inputs.

• (145) In sum, the GOC has measures in place to induce operators to comply with the public policy objectives concerning the sector. Such measures impede market forces from operating freely.

3.2.1.5.   Significant distortions according to Article 2(6a)(b), fourth indent of the basic Regulation: the lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws

• (146) According to the information on file, the Chinese bankruptcy system delivers inadequately on its own main objectives such as to fairly settle claims and debts and to safeguard the lawful rights and interests of creditors and debtors. This appears to be rooted in the fact that while the Chinese bankruptcy law formally rests on principles that are similar to those applied in corresponding laws in countries other than China, the Chinese system is characterised by systematic under-enforcement.

• (147) The number of bankruptcies remains notoriously low in relation to the size of the country’s economy, not least because the insolvency proceedings suffer from a number of shortcomings, which effectively function as a disincentive for bankruptcy filings. Moreover, the role of the state in the insolvency proceedings remains strong and active, often having direct influence on the outcome of the proceedings ⁹⁹.

• (148) In addition, the shortcomings of the system of property rights are particularly obvious in relation to ownership of land and land-use rights in China. ¹⁰⁰ All land is owned by the state (collectively owned rural land and State-owned urban land) and its allocation remains solely dependent on the state. There are legal provisions that aim at allocating land use rights in a transparent manner and at market prices, for instance by introducing bidding procedures. However, these provisions are regularly not respected, with certain buyers obtaining their land for free or below market rates ¹⁰¹. Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land ¹⁰².

• (149) Much like other sectors in the Chinese economy, the producers of the product concerned are subject to the ordinary rules on Chinese bankruptcy, corporate, and property laws. That has the effect that these companies, too, are subject to the top-down distortions arising from the discriminatory application or inadequate enforcement of bankruptcy and property laws. Those considerations, on the basis of the evidence available, appear to be fully applicable also in the sector of the product concerned. The present investigation revealed nothing that would call those findings into question.

• (150) In light of the above, the Commission concluded that there was discriminatory application or inadequate enforcement of bankruptcy and property laws in the sector of the product concerned.

3.2.1.6.   Significant distortions according to Article 2(6a)(b), fifth indent of the basic Regulation: wage costs being distorted

• (151) A system of market-based wages cannot fully develop in China as workers and employers are impeded in their rights to collective organisation. China has not ratified a number of essential conventions of the International Labour Organisation, in particular those on freedom of association and on collective bargaining ¹⁰³.

• (152) Under national law, only one trade union organisation is active. However, this organisation lacks independence from the state authorities and its engagement in collective bargaining and protection of workers’ rights remains rudimentary ¹⁰⁴. Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area.

• (153) This typically results in workers who are not in possession of the local residence registration finding themselves in a vulnerable employment position and receiving lower income than the holders of the residence registration ¹⁰⁵. Those findings lead to the distortion of wage costs in China.

• (154) No evidence was submitted to the effect that the biodiesel sector would not be subject to the Chinese labour law system described. The sector is thus affected by the distortions of wage costs both directly (when making the product concerned or the main raw material for its production) as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China).

3.2.1.7.   Significant distortions according to Article 2(6a)(b), sixth indent of the basic Regulation: access to finance granted by institutions which implement public policy objectives or otherwise not acting independently of the state

• (155) Access to capital for corporate actors in China is subject to various distortions.

• (156) First, the Chinese financial system is characterised by the strong position of state-owned banks ¹⁰⁶, which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Similar to non-financial SOEs, the banks remain connected to the state not only through ownership but also via personal relations (the top executives of large state-owned financial institutions are ultimately appointed by the CCP) ¹⁰⁷ and they regularly implement public policies designed by the GOC.

• (157) In doing so, the banks comply with an explicit legal obligation to conduct their business in accordance with the needs of the national economic and social development and under the guidance of the industrial policies of the state ¹⁰⁸. While it is acknowledged that various legal provisions refer to the need to respect normal banking behaviour and prudential rules such as the need to examine the creditworthiness of the borrower, the overwhelming evidence, including findings made in trade defence investigations, suggests that these provisions play only a secondary role in the application of the various legal instruments.

• (158) For example, the GOC has clarified that even private commercial banking decisions must be overseen by the CCP and remain in line with national policies. One of the state’s three overarching goals in relation to banking governance is now to strengthen the Party’s leadership in the banking and insurance sector, including in relation to operational and management issues ¹⁰⁹. Also, the performance evaluation criteria of commercial banks have now to, notably, take into account how entities “serve the national development objectives and the real economy”, and in particular how they “serve strategic and emerging industries”. ¹¹⁰

• (159) Furthermore, bond and credit ratings are often distorted for a variety of reasons including the fact that the risk assessment is influenced by the firm's strategic importance to the GOC and the strength of any implicit guarantee by the government ¹¹¹. This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important ¹¹². This results in a bias in favour of lending to SOEs, large well-connected private firms and firms in key industrial sectors, which implies that the availability and cost of capital is not equal for all players on the market.

• (160) Second, borrowing costs have been kept artificially low to stimulate investment growth. This has led to the excessive use of capital investment with ever lower returns on investment. This is illustrated by the growth in corporate leverage in the state sector despite a sharp fall in profitability, which suggests that the mechanisms at work in the banking system do not follow normal commercial responses.

• (161) Thirdly, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 ¹¹³ and, in 2020, official media in China have reported that the CCP called for “guiding the loan market interest rate downwards” ¹¹⁴. Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

• (162) Overall credit growth in the China indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called “zombie” companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes.

• (163) In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant distortions resulting from the continuing pervasive role of the state in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (164) In the sector of the product concerned, for instance, the 2023 NEA Notice mentioned in recital (115)(122), mandates that “[a]ccording to the actual situation, each region will increase the guarantee of land and sea use and other factors for pilot demonstration creation projects, optimize the project approval process, and study and provide financial support to create good conditions for the construction of pilot demonstration areas and projects” ¹¹⁵.

• (165) No evidence was submitted in the present investigation demonstrating that the sector of the product concerned is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

3.2.1.8.   Systemic nature of the distortions described

• (166) The Commission noted that the distortions described in the updated Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above as well as in Part I of the updated Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above and in Part II of the updated Report.

• (167) The Commission recalls that in order to produce the product concerned, certain inputs are needed. When the producers of the product concerned purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors. These distortions were described in detail above, in particular in sections 3.2.1 to 3.2.1.7. The Commission pointed out that the regulatory setup underpinning those distortions is generally applicable, biodiesel producers being subject to those rules as any other economic operator in China. The distortions have therefore a direct bearing on the cost structure of the product concerned.

• (168) As a consequence, not only the domestic sales prices of the product concerned are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the updated Report.

• (169) Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.

3.2.1.9.   Comments submitted by interested parties on the finding of significant distortions

• (170) CCCMC, in the observations submitted on 26 January 2024, expressed its general position that the methodology prescribed by Article 2(6a) of the basic Regulation for establishing the normal value is incompatible with the WTO agreements and jurisprudence, in particular Articles 2.1 and 2.2 of the WTO Anti-dumping Agreement (‘ADA’), which provide the standard methodologies in order to establish the normal value. In this regard, CCCMC submitted the following claims.

• (171) First, Section 15 of China’s Protocol of Accession to the WTO allowed WTO members to derogate from the above-mentioned standard methodology in determining normal value and price comparability only until 11 December 2016, when such derogation expired. Since then, EU was expected to adhere to the standard methodologies provided for under Article 2.1 and 2.2 ADA to establish the normal value of the Chinese exporting producers, therefore using the actual prices and costs of the Chinese exporting producers.

• (172) Second, the methodology provided for in the ADA to establish the normal value does not allow the use of information other than information pertaining to the exporting country, which implies that the investigating authority cannot calculate normal value based on undistorted prices or benchmarks in an appropriate representative country (other than the exporting country) on the grounds of the existence of significant distortions, the notion of which does not exist in the ADA. To support its claim, CCCMC cited the Appellate Body report in DS473 EU – Biodiesel (Argentina) dispute.

• (173) These arguments could not be accepted. The Commission considered that the provision of Article 2(6a) is fully consistent with the European Union’s WTO obligations and the jurisprudence cited by CCCMC. Indeed, the existence of significant distortions renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) of the basic Regulation envisages the construction of costs of production and sale on the basis of undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country. The Appellate Body report in DS473 did not concern the application of Article 2(6a) of the basic Regulation, but of a specific provision of Article 2(5) of the basic Regulation. In any event, WTO law as interpreted by the Appellate Body in DS437, allows the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated.

• (174) As regards to commitments under section 15 of China’s Protocol of Accession to the WTO, the Commission pointed out that in anti-dumping proceedings concerning products from China, the parts of section 15 of the Protocol that have not expired continue to apply when determining normal value.

• (175) Since the Commission has concluded in section 3.2.1 that it is appropriate to apply Article 2(6a) of the basic Regulation in this investigation and the provision is fully consistent with WTO rules, these claims were rejected.

• (176) CCCMC, in its observations, further claimed that the complainant did not find sufficient evidence of significant distortions affecting prices and costs in China. In this regard CCCMC submitted a number of arguments.

• (177) First, in order to demonstrate the existence of significant distortions and the governmental supervision, guidance and intervention in the biodiesel sector, the complainant relied on documents which are either outdated – such as the Report – or too general and non-binding – such as the Strategic Action Plan for Energy Development (2014-2020), which has now expired, and the 14^th FYP (2021-2025) for Renewable Energy Development.

• (178) Second, the complainant also relied on several past Commission investigations, which either have no temporal correlation with the present case or concern different products, industries and sectors. CCCMC recalled that, as held by the Appellate Body in DS379 US – AD and CVD (China): “[M]erely incorporating by reference findings from one determination into another determination will normally not suffice as a reasoned and adequate explanation. Nonetheless, where there is close temporal and substantive overlap between the two investigations, such cross reference may, exceptionally, suffice” ¹¹⁶. Thus, considering the lack of temporal and substantive correlation between such past investigations and the present case, a simple reference to the Commission findings in such investigations does not serve as sufficient evidence of substantial distortions in the Chinese biodiesel industry.

• (179) Third, in order to demonstrate substantial government intervention affecting domestic prices and costs, the complainant adduced that many enterprises in China are state-owned. However, state-ownership does not constitute sufficient evidence of “meaningful control”, “entrustment”, “direction” by the Government or “state interference” with respect to prices or costs in a given industry.

• (180) Fourth, in any case, the complainant did not provide evidence to prove that government intervention is the cause of “significant distortions” affecting the Chinese biodiesel producers’ prices and/or costs. In the absence of any such evidence, it cannot be assumed that the prices and costs of the Chinese biodiesel producers are not the result of free market forces.

• (181) The Commission could not accept CCCMC’s arguments concerning (the alleged lack of) evidence of significant distortions in China for the following reasons.

• (182) First, even if certain Chinese policy documents, such as the FYPs of the 13^th planning cycle referred to in the Report, have expired in the meantime, the types and extent of distortions described in the Report remain in place in China. This is because the core legislation – including the Chinese Constitution, the CCP Constitution, as well as numerous secondary laws - maintains the elements which result in distortions in the sense of Article 2(6a) of the basic Regulation and which the Report describes in detail. The complainant was therefore right to rely on the Report as a source of information pointing to the existence of significant distortions. The Commission recalled in this context the specific standard of evidence at initiation pursuant to Article 5(9) of the basic Regulation (see recital (186) for more details). In any event, far from relying solely on the evidence in the Report, the complainant referred to a number of additional distortive elements in the biodiesel sector in China, as described in recitals (80) - (90) above.

• (183) Moreover, the Commission disagreed that the 14^th FYP for Renewable Energy Development, as well as other FYPs, merely represent a non-binding guideline. To the contrary, the Commission recalled that the Chinese system of planning sets out priorities and prescribes the goals the central and local governments must focus on. Relevant plans exist on all levels of government and cover virtually all economic sectors and the authorities at each administrative level monitor the implementation of the plans by the corresponding lower level of government. As described in detail in the updated Report, the objectives set by the planning instruments are in fact of binding nature, with the planning system resulting in resources being allocated to sectors designated as strategic or otherwise politically important by the government, rather than being allocated in line with market forces.

• (184) Second, the Commission recalled that indeed in DS379, the Appellate Body’s ruling explicitly set out that cross referencing from one determination into another is allowed, where there is close temporal and substantive overlap between the two investigations. Such substantive overlap clearly exists between the present investigation and the investigations referred to by the complainant, given in particular that those investigations analysed policies and rules which are of general application throughout the Chinese economy, across all sectors, and therefore influence also the sector of the product concerned, such as the GOC and CCP influence over companies and/or the fact that the system of planning in the PRC results in resources being allocated in line with industrial policies’ objectives. Furthermore, the finding of the Appellate Body recalled by CCCMC concerned final determination rather than sufficiency of evidence at an initiation.

• (185) Third, in relation to state-ownership, the Commission explained in the updated Report the all-encompassing influence that the GOC and the CCP maintain over SOEs, as well as the relevant legal and organisational feature which provide the Chinese authorities influence over the market conduct also in the case of privately owned companies (see, in particular, section 3.2.1.2). Furthermore, the Commission recalled that, pursuant to Article 2(6a)(b) of the basic Regulation, the Commission does not assess whether state ownership amounts to “meaningful control”, “entrustment”, “direction” or “state interference” by the Government with respect to prices or costs in a given industry. Instead, the Commission determines whether the market in question is 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. This in turn is one of the elements the impact of which is to be taken into account when assessing the existence of significant distortions.

• (186) Fourth, as confirmed by the General Court in Viraj Profiles quantity and quality of the evidence necessary to meet the criteria of the sufficiency of the evidence for the purpose of initiating an investigation 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. ¹¹⁷The complaint met the standards set in Article 5(9) of the basic Regulation, in combination with Article 2(6a)(d). Indeed, as indicated in the Notice of Initiation, the Commission considered at the initiation stage that there was sufficient evidence pursuant to Article 5(9) of the basic Regulation tending to show that, due to significant distortions affecting prices and costs, the use of domestic prices and costs in the PRC would be inappropriate, thus warranting the initiation of an investigation on the basis of Article 2(6a) of the basic Regulation. The Commission therefore proceeded to prove such distortions in sections 3.2.1.1 to 3.2.1.8.

• (187) Therefore, the Commission rejected CCCMC’s claims.

• (188) Zhuoyue, in their observations submitted on 15 March 2024, expressed their general position that Article 2(6a) of the basic Regulation is not compatible with WTO law.

• (189) Since this claim is similar to the ones CCCMC sustained, the Commission rejected it for the reasons described above (see recitals (173) and (174)).

• (190) Zhuoyue argued as well that the complainant failed to demonstrate the existence of significant distortions and that there are no significant distortions in China’s biodiesel industry. The Commission noted that the claims raised by Zhuoyue with respect to the complainant’s alleged failure to show distortions are essentially identical to the ones CCCMC sustained and therefore are to be rejected for the reasons described above (see recitals (182)(184) and (186)). Nevertheless, Zhuoyue submitted the following additional claims.

• (191) First, the EU has adopted EU-wide market measures that substantially correspond to similar Chinese measures, including providing subsidies to EU industries to promote their adherence to new EU industrial policy objectives (which themselves reflect Chinese government industrial policy objectives) and intervention in corporate investment and decision-making.

• (192) Second, Zhuoyue is a privately owned enterprise, without any governmental background, so its operations are not subject to any intervention or influence by the GOC. The complainant cited several national programs that the company has undertaken (see recital (82)), but such programs focused on technology research and development and are meant to encourage and promote innovation and development of technologies in certain industries. They do not have any influence on the cost or price of products of Chinese producers or free market force.

• (193) Third, the complainant’s allegations on government intervention due to the nature of state-owned enterprises and connections between the CCP and Chinese biodiesel producers are baseless. Indeed, according to Art. 6 of Law of the People’s Republic of China on State-owned Assets in Enterprises (‘SOE law’), “[t]he State Council and the local people’s governments shall, according to law, perform the contributor’s functions, based on the principles of separation of government bodies and enterprises, separation of the administrative functions of public affairs and the functions of the state-owned assets contributor, and non-intervention in the legitimate and independent business operations of enterprises”. This provision is mandatory and therefore, no matter whether a producer is state-owned or not, the operation of such producer is independent from the government.

• (194) In response to Zhuoyue’s arguments, the Commission noted, first, that EU policies have no relevance in the context of an assessment carried out pursuant to Article 2(6a) of the basic Regulation.

• (195) Second, as to Zhuoyue’s claim that it is a privately-owned company, the Commission described in sections 3.2.1.1 to 3.2.1.8 the substantial government interventions in the PRC resulting in a distortion of the effective allocation of resources in line with market principles. Those distortions affect the commercial operators irrespective of the ownership structure or managerial setup. In addition, regarding the claim that national programmes focus on research and development, the Commission pointed out that while research and development costs do influence costs and prices of the final products, the complainant referred to these programmes as elements pointing to the control or policy supervision or guidance of the authorities over the economic operators in the biodiesel sector in China.

• (196) Finally, the Commission noted that Zhuoyue’s reading of the SOE Law is plainly selective. While the company emphasized the formal division between the administrative and shareholder roles of the State according to Article 6 of the SOE Law, it chose to omit a reference to Article 1. Article 1 defines the overall purpose of the law as, inter alia, supporting the leading role of the State-owned economic sector in the national economy, and promoting the development of the socialist market economy. Zhuoyue also failed to refer to Article 7, which mandates the state to encourage greater investment of state capital in key industries and areas important for the national economy; as well as to Article 36 according to which SOEs, when making investments, shall comply with the national industrial policies. Such provisions in fact create a legal environment in which a separation between government and enterprises is all but impossible.

• (197) Therefore, the Commission rejected Zhuoyue’s claims.

• (198) On 31 January 2024, the GOC submitted its own observations, expressing the general position that Article 2(6a) of the basic Regulation is not compatible with WTO law. Since these claims are analogous to the ones raised by CCCMC and Zhuoyue to the Commission rejected the for the reasons described above (see recitals (173), (174), (182) and (194)).

• (199) In addition to the claims concerning WTO compatibility of the Article 2(6a) of the basic Regulation, the GOC submitted that the investigation conducted by the Commission based on Article 2(6a) of the basic Regulation in this case had double standards. According to the GOC, the Commission refused to accept the cost data of Chinese exporters on grounds that there were significant market distortions in the Chinese market, but it accepted the representative country’s data and used it to replace the Chinese producers’ data without any evaluation of whether there may be market distortions affecting these replacing data. This, according to the GOC, is a proof of ‘double standards’. The GOC pointed out that under the EU law, the Commission is obliged to use undistorted prices to construct the normal value. Therefore, the Commission should, in the GOC’s view, take the initiative to investigate and prove the existence or non-existence of distortions in the representative countries, rather than passively waiting for the parties involved in the case to submit evidence.

• (200) The Commission was not persuaded by this argument. Indeed, in accordance with Article 2(6a)(a) of the basic Regulation, the Commission proceeds to construct the normal value on the basis of data other than domestic prices and costs (unless such costs are positively established not to be distorted) in the exporting country only where it establishes that such data is appropriate to reflect undistorted prices and costs. In this process, the Commission is bound to use only undistorted data. In that respect, far from waiting passively, the Commission does its own analysis and invites interested parties to comment on the proposed sources for the determination of the normal value in the early stages of the investigation, namely via the notes on the undistorted sources it intends to use released early on in the proceeding. The Commission’s ultimate decision as to which undistorted data should be used to calculate the normal value takes full account of all comments received by parties, as well as Commission’s own research.

• (201) Finally, the GOC argued that the Report is misrepresentative, one-sided, and out of touch with reality. The Report allegedly treated the legitimate competitive advantages of Chinese companies and the normal institutional differences between China and EU as the basis for the determination of significant market distortion. Furthermore, the GOC claimed that the fact that the Commission accepted the market distortion allegations claimed by the Union industry based on the Report, provided unfair advantages to the Union industry, which equalled to making judgments before trial. Proving evidence for the industry’s complaint equals to taking the side of the industry, therefore not conforming to the fundamental legal spirit of fairness and justice.

• (202) The Commission could not accept these arguments. The Report, as well as the updated Report, are comprehensive documents based on extensive objective evidence, including legislation, regulations and other official policy documents published by the GOC, reports by international organisations, academic studies and articles by scholars, and other reliable independent sources. It was placed on the investigation file so that any interested party would have ample opportunity to rebut, supplement or comment on it and the evidence on which it is based. The GOC did not provide any such rebuttal and only submitted unsubstantiated generic comments. The same argumentation is valid for the Updated Report as well.

• (203) The GOC suggested as well that issuing a country report replaced the actual investigation, but the Commission recalled that according to Article 2(6a)(e) of the basic Regulation, if the Commission deems sufficient the evidence submitted by the complainant on the significant distortions, it can initiate the investigation on this basis. However, the determination on the actual existence and impact of significant distortions and the consequent use of the methodology prescribed by Article 2(6a)(a) of the basic Regulation occurs at the time of the provisional and/or definitive disclosure as result of an investigation. The existence and potential impact of the significant distortions are not confirmed at initiation stage as claimed by the GOC, but only after an in-depth investigation, hence this argument as well is rejected.

• (204) In conclusion, no comprehensive material evidence or arguments refuting the existence of significant distortions in the biodiesel sector have been adduced by the GOC, CCCMC or the exporting producers in the present investigation.

3.2.2.   Representative country

3.2.2.1.   General remarks

• (205) The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:

• — A level of economic development similar to the PRC. For this purpose, the Commission used countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank ¹¹⁸;

• — Production of the product under investigation in that country;

• — existence of relevant readily available data in the representative country;

• — Where there is more than one possible representative country, preference was given, where appropriate, to the country with an adequate level of social and environmental protection.

• (206) As explained in recitals (64) to (68), the Commission issued two notes for the file on the sources for the determination of the normal value. These notes described the facts and evidence underlying the relevant criteria, and also addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Malaysia as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

3.2.2.2.   A level of economic development similar to the PRC and production of the product under investigation

• (207) In the First Note, the Commission identified 49 countries with a similar level of economic development as the PRC according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis where production of the product under investigation was known to take place. Out of those 49 countries, the Commission identified six countries with the largest production of biodiesel in 2022 and 2023 using the projections by OECD and FAO ¹¹⁹. Those countries were (in the order of their production volume): Brazil, Argentina, Thailand, Malaysia, Colombia, and Peru. Brazil was also identified as an appropriate representative country by EBB in the complaint.

• (208) In their comments on the First Note, EBB, EcoCeres, and Jiaao commented on the production of the product under investigation. EBB submitted that Brazil as the largest biodiesel producer amongst the countries at the level of development similar to the PRC was the most suitable representative country. Contrary to that, EcoCeres and Jiaao argued that Brazil was not suitable as only a few producers manufactured biodiesel from the same feedstocks as the Chinese producers, the main feedstocks being UCO, brown grease (‘BG’), and palm oil mill effluent (‘POME’). According to EcoCeres, there was also insufficient production of biodiesel from those feedstocks in Colombia and Thailand.

• (209) In addition, EBB, EcoCeres, and Jiaao commented on the high level of government regulation along the biodiesel value chain in the four potential representative countries (Brazil, Colombia, Malaysia, and Thailand) identified in the First Note (see recital (246)).

• (210) With regard to the comments on the level of government regulation along the biodiesel value chain in the potential representative countries, the Commission, in the Second Note, pointed out that the biodiesel market and its value chain are regulated through governments’ measures worldwide as the industry significantly contributes to the countries meeting their international commitments to the reduction of greenhouse gas emissions.

• (211) In its comments on the Second Note, EBB reiterated that the biodiesel market and its value chain are subject to government regulations in Malaysia. In particular, according to EBB, the price of biodiesel is set by the Government of Malaysia (‘GOM’) through a pricing formula providing for a fixed SG&A and profit. In addition, exports of crude palm oil are subject an export tax, which according to EBB influences the production cost of Malaysian biodiesel producers. Finally, EBB pointed out that as of February 2024, the Malaysian state Sabah also made exports of POME subject to an export tax.

• (212) With regard to Malaysia, the Commission noted that the automatic pricing mechanism applies to fuel sold by retailers at petrol stations, i.e. to petrol blended with biodiesel. The price of such fuel is set using a pricing formula, which takes into account a benchmark price of crude oil, various costs of the oil company and the retailer, as well as their profit. ^{120 121 122} Where the fixed price is below a desirable market price, i.e. does not cover the retailer’s cost and profit, GOM may offset the difference via a subsidy paid to the retailer ¹²³.

• (213) Furthermore, when selecting companies to be used as the source of SG&A and profit, the Commission focused on those that produced biodiesel from UCO, POME and BG. Although some of the selected companies may partially use crude palm oil as one of their feedstocks, the Commission considered that their financial results would only be affected marginally. Finally, the export tax imposed by Sabah is not relevant for the present investigation as it was introduced only after the investigation period.

• (214) Consequently, the Commission considered that the government regulations applicable to the biodiesel market and its value chain in Malaysia were not of such nature that would render the country not suitable as a representative country.

• (215) With regard to Brazil, in its comments on the Second Note, EBB pointed out that the system of public auctions was replaced by over-the-counter trading with biodiesel as of 2022. EBB further confirmed that imports of biodiesel are extremely limited as they are subject to import licences, which are issued only in exceptional cases. EBB nevertheless claimed that these measures did not influence the prices and costs on the Brazilian market as sufficient competition is warranted by the number of certified biodiesel producers operating in the industry.

• (216) The Commission took note of this additional information. As Malaysia was confirmed as an appropriate representative country, the Commission did not find it necessary to analyse the regulation of biodiesel market and its value chain in Brazil in detail.

3.2.2.3.   Existence of relevant readily available data in the representative country

3.2.2.3.1.   Factors of production

• (217) In the First Note, the Commission focused on the most important factors of production representing more than 80% of the Chinese cost of production, i.e. the feedstocks falling under HS codes 1518 00 (UCO) and 3823 19 (POME, BG and most other feedstocks, such as food waste or soap stock). The Commission analysed whether the six potential representative countries had in place export restrictions distorting the domestic price, whether they imported such quantities from China that could potentially distort the average import price, and finally whether the goods falling under the two key HS codes were imported in representative quantities. The analysis was conducted not only at the level of the HS codes but also at the level of more detailed goods codes depending on the customs nomenclature of the individual countries.

• (218) The Commission found that in Argentina, all goods falling under the two key HS codes were subject to an export tax. In addition, certain goods falling under HS code 1518 00 were subject to export licensing in Malaysia.

• (219) The Commission further found that significant quantities of coal imported to Argentina (HS 2701 11 ), of goods classified under three goods codes falling under HS code 1518 00 in Malaysia, and five goods falling under HS code 1518 00 in Thailand originated in the PRC.

• (220) After excluding imports that were either subject to export restrictions or likely affected by the significant quantities imported from the PRC, Malaysia was the country with by far the largest quantities of goods imported under the two key HS codes (200 thousand tonnes under HS code 1518 00 and 790 thousand tonnes under HS code 3823 19 as compared to 17 thousand tonnes under HS code 1518 00 in Thailand and 18 thousand tonnes under HS code 3823 19 in Brazil, the two countries with second largest import volumes).

• (221) In its comments on the representative country and factors of production submitted at initiation, EcoCeres pointed out that HS code 1518 00 covered a wide variety of goods. Therefore, any customs nomenclature that did not allow to distinguish between edible and inedible fats and oils was entirely unsuitable to identify an appropriate goods code. In this respect, the company suggested that the Commission should use “undistorted international prices, costs, or benchmarks” to establish the undistorted cost of UCO and submitted price information collected and published by Argus Biofuels ¹²⁴.

• (222) In the First Note, the Commission found it indeed necessary to select an appropriate source of undistorted cost of UCO. The Commission noted that only the customs nomenclatures of Malaysia and Thailand allowed to differentiate between edible and inedible fats and oils. The Commission decided to further analyse the quality of all potential sources of undistorted cost of UCO, including the international benchmarks provided by EcoCeres.

• (223) In their comments on the First Note, EcoCeres, Jiaao and Zhuoyue argued that Malaysia was the only potential representative country with representative import volumes under HS codes 1518 00 and 3823 19 , which covered the most important feedstocks used by the sampled exporting producers (see recital (208)). In addition, EcoCeres and Zhuoyue reiterated that the respective HS codes covered a broad variety of different products and that only the customs nomenclature of Malaysia and Thailand allowed for a differentiation of edible and inedible fats and oils under HS code 1518 00 . EcoCeres reiterated that international benchmarks could be used to establish the undistorted costs of UCO and POME.

• (224) On the other hand, in its comments on the First Note, EBB highlighted that the import volumes under the two key HS codes to Brazil were the second largest (amongst the four remaining potential representative countries, see recital (246)) after Malaysia and argued that the price of Brazilian imports under HS code 1518 00 reflected the price of non-edible fats and oils on the domestic market.

• (225) EBB further submitted that since some of the goods under HS code 1518 00 were subject to export licensing in Malaysia, this export restriction distorted also the import (and domestic) prices of all goods falling under the respective HS code. EcoCeres disagreed and argued that should the export licensing applicable to some of the goods supress the prices of all goods under HS code 1518 00 , the foreign suppliers would have redirected their sales to other markets with more attractive prices.

• (226) With regard to the availability of relevant data, Zhuoyue noted that there were no imports of biopitch in Brazil and Colombia.

• (227) In the Second Note, the Commission found it crucial to identify goods codes that are as close as possible to the actual feedstocks used by the Chinese producers. In this respect, the Commission concluded that the customs nomenclature of Brazil and Colombia did not allow to identify imports that would reflect the domestic prices of UCO. In addition, following the on-spot verifications, it was confirmed that the import volumes under the two key HS codes in Brazil, Colombia and Thailand were not representative, in particular in relation to the consumption volumes of the Chinese biodiesel producers.

• (228) Considering the fact that HS code 1518 00 covers a wide range of products, including such that are not used as feedstocks for biodiesel production, the Commission found it unlikely that the export licensing applicable to several goods codes would suppress the import (and domestic) prices of all goods imported under HS code 1518 00 .

• (229) The Commission, however, rejected the use of international benchmarks for UCO and POME at this stage of the investigation as the benchmarks did not specify the origin of the respective feedstock. Therefore, it could not be ascertained that the data for UCO was not distorted by feedstock of Chinese origin. Similarly, it was found that the prices of POME originating in Indonesia were distorted by the application of an export tax (see recital (237)) and it could not be excluded that Indonesia POME was covered by the respective benchmark.

• (230) Concerning the imports of biopitch, the Commission noted that although it was not an important input in terms of its share on total cost of production, the selection of a representative country with imports of biopitch was an advantage.

• (231) In their comments on the Second Note, EBB and Jiaao submitted comments concerning the undistorted cost of UCO. EBB pointed out that certain volumes of UCO imported to Malaysia originated in Indonesia. The prices of those imports were, however, distorted by the export tax levied on export of UCO from Indonesia ¹²⁵.

• (232) The Commission examined the claims and found that indeed exports of UCO from Indonesia were subject to an export tax. On that basis, the Commission decided to exclude imports of UCO into Malaysia originating in Indonesia from the determination of the undistorted cost.

• (233) Referring to its comments on the government regulations of the biodiesel market and its value chain in Malaysia (see recital (211)), EBB reiterated that the imports under HS codes 1518 00 (for UCO) and 3823 19 (for POME) to Brazil were not unreliable despite their limited volume. The party suggested two alternatives:

• — Should the Commission insist on the import quantity rendering the import prices unreliable, the Commission should use the imports under the two key HS codes into the US.

• — Should the Commission select Malaysia as the representative country, the Commission should not exclude goods codes covering ‘edible fats and oils’ from the import data used to determine the undistorted cost of UCO. In this respect, EBB submitted sample contracts as evidence that ‘edible oils’ refer to such oils that were formerly edible and come from households.

• (234) As concluded in recital (258), the Commission considered Malaysia as an appropriate representative country at the provisional stage. Therefore, the use of imports into the US as an alternative source of benchmarks for UCO and POME was rejected. With regard to the classification of UCO under edible or inedible oils, at this stage of the investigation, the Commission is not able to conclude on whether the classification used in the contracts is compatible with the Malaysian customs nomenclature, in particular as the party failed to provide a meaningful non-confidential summary of its arguments.

• (235) In its comments on the Second Note, Jiaao argued that the Commission should exclude certain goods codes, such as covering inedible oils from linseed, olives and ground nuts, from the scope of codes used to determine the undistorted cost of UCO. The party claimed that the Commission verified that such types of oils were not used by the company in their biodiesel production. Furthermore, Jiaao submitted that imports of UCO originating in Japan should be excluded from the determination of the benchmark as Japan has a limited domestic supply of UCO ¹²⁶.

• (236) Although Japan has indeed a limited domestic availability of UCO, in 2022 it exported most of the collected volumes ¹²⁷. For comparison, in 2022 the exported volumes significantly exceeded the volumes imported into Malaysia from Japan in the investigation period. Consequently, the Commission rejected both claims.

• (237) In its comments on the Second Note, EBB submitted that the Malaysian imports of POME under HS code 3823 19 were distorted by significant quantities of imports from Indonesia. As Indonesia levies an export tax on exports of POME ¹²⁸, the prices of those imports were distorted.

• (238) Following this claim, the Commission decided at this stage to exclude imports of goods falling under the relevant goods codes for POME and palm oil fatty acids, as imports under the same goods codes are used for both inputs as the source of undistorted cost, originating in Indonesia from consideration.

• (239) In its comments on the Second Note, Zhuoyue claimed that the Commission should not use goods code 3823 19 90 as one of the codes for BG, food waste, soap stock and spent bleaching earth oil (‘SBEO’). According to the party, that code does not cover refined acid oils while the above-mentioned feedstocks all represent such oils. The company supported its arguments by the fact that the unit import price under this code was higher than the unit import price of UCO, which is counterintuitive as UCO is the more valuable feedstock taking into account its characteristics, such as content of free fatty acids, composition, metal content.

• (240) The Commission consulted the customs nomenclature of Malaysia available via the Commission’s website Acces2Markets ¹²⁹ and provisionally concluded that all goods under HS code 3823 19 , except for those related to palm oil derivatives, should be reasonably included in the determination of the benchmark for feedstocks with higher levels of free fatty acids, such as BG, food waste, soap stock and SBEO. Therefore, the Commission rejected the claim.

• (241) In its comments on the Second Note, Zhuoyue maintained that the Commission should not replace the Chinese cost with an undistorted benchmark as there was no evidence of significant distortions in the biodiesel market in the PRC. The party further maintained that even if the labour cost is replaced with a benchmark, the Commission should identify a more suitable method of adjusting the Malaysian labour cost, which was only available for 2016, to a level appropriate for the IP. Zhuoyue argued that there was no correlation between the level of wages and the inflation rate expressed through the Producer Price Index (‘PPI’).

• (242) With regard to the alleged undistorted biodiesel market in the PRC, the Commission refers to its findings in sections 3.2.1 to 3.2.1.8 and specifically concerning the labour market in section 3.2.1.6. Since the labour cost represented a negligible share on the exporting producers’ cost of production (maximum 1,5 %), the Commission considered that using the PPI to update the labour cost in Malaysia did not significantly influence the undistorted normal value. Therefore, the Commission rejected the claim.

• (243) In its comments on the Second Note, Zhuoyue furthermore pointed out that the Commission changed the HS code to be used for biopitch from 1522 00 to 1520 00.

• (244) The Commission found that the change was due to a clerical error and corrected that error before establishing the undistorted cost of biopitch.

3.2.2.3.2.   Financial information

• (245) In the First Note, the Commission found that exports of biodiesel originating in Argentina are subject to anti-dumping and anti-subsidy measures imposed by Peru ^130 131, the Union ¹³², and the United States ^133 134 (‘US’). As such, the financial results of Argentinian producers could be potentially distorted by subsidisation and dumping practices. In addition, the financial data of biodiesel producers in Peru could be potentially affected by injury suffered from dumped and/or subsidised imports of biodiesel originating in Argentina and the US ¹³⁵.

• (246) Following the findings of export restrictions in Argentina (see recital (218)) and potential distortion of financial information based on the existence of trade defence measures concerning Argentina and Peru, the Commission further analysed the availability and quality of financial information only for the remaining four potential representative countries: Brazil, Colombia, Malaysia, and Thailand.

• (247) In the First Note, the Commission identified three producers of biodiesel with suitable readily available financial information in Brazil, one of them based on the information in the complaint. For all three companies, the financial information partially overlapped with the investigation period, contained details in the form of Notes to the financial statements, and was compliant either with the International Financial Reporting Standards (‘IFRS’) or the local Generally Accepted Accounting Principles. In Colombia, readily available financial information was available for five companies. The financial information did not contain any further details in the form of the Notes to the financial statements. For Malaysia and Thailand, readily available financial information from the Orbis database was available for one company per country. In addition, the financial information of the Thai company was partially not compliant with the IFRS.

• (248) In its comments on the First Note, EBB pointed out that Brazil was the only potential representative country where full set of financial statements was available for a biodiesel producer. EcoCeres, however, submitted a full set of financial statements of thirteen producers of biodiesel from a local Malaysian registry in its comments on the First Note. EcoCeres also noted that one of the biodiesel producers identified by the Commission in Colombia was a subsidiary of another identified company. The parent entity was in addition a large integrated oil company and, according to EcoCeres, should not be considered. Finally, EcoCeres and Zhuoyue argued that Thailand should not be considered a suitable representative country since the only readily available financial statements identified by the Commission were partially not compliant with IFRS.

• (249) In the Second Note, the Commission strived to calibrate the selection of suitable biodiesel producers with readily available financial information. Therefore, it decided to consider in this case the feedstocks used by the producers in the potential representative countries. The Commission found two companies producing biodiesel from UCO, BG or POME in Brazil, two such companies in Colombia, ten in Malaysia, and eight in Thailand.

• (250) Following the conclusion that the imports of the main inputs to Colombia and Thailand were not representative in terms of quantity (see recital (227)), the Commission analysed the availability and quality of financial information in Brazil and Malaysia.

• (251) Although the financial statements of the two Brazilian companies (see recital (249)) were available, they did not contain segment reporting at all, or the segment reporting was not sufficient to single out the financial information concerning the production of biodiesel. Of the ten Malaysian companies, seven were identified by EcoCeres and three by the Commission. The Commission found the financial statements of seven of those companies suitable to establish the SG&A and profit. For the other three, the financial information was not available at all, or the segment reporting did not allow to determine financial information specific to the production of biodiesel.

• (252) In its comments on the Second Note, EBB provided a list of approximately 45 biodiesel producers in Brazil, out of which approximately 20 produced biodiesel from UCO or palm oil fatty acid (‘PFAD’). EBB submitted that the Commission should use the financial information of the company BE8. Should the Commission find its financial statements not suitable, EBB contended that the Commission was entitled to use the financial information of a company producing a product in the same general category as biodiesel. In this respect, EBB suggested the ethanol producer SF, which was recently certified as meeting international requirements as a supplier of ethanol for the production of SAF (via the alcohol-to-jet pathway).

• (253) For three of the 20 producers of biodiesel from UCO or PFAD identified by EBB, the financial statements had been available from previous stages of the selection of the representative country. For two of them, including BE8, the Commission had already concluded that the financial statements were not a suitable source of undistorted SG&A and profit as explained in recital (251). The only remaining company would be Caramuru Alimentos S.A. (‘Caramuru’), which was proposed by EBB in the complaint.

• (254) Considering the conclusions on the availability of information on factors of production as presented in recital (227) and the availability of suitable financial information for a number of Malaysian biodiesel producers, the Commission concluded that the availability of financial information for Caramuru was not relevant. There was also no need to search for and analyse financial information of a company producing a product in the same general category as biodiesel.

• (255) Finally, in its comments on the Second Note, Zhuoyue argued that the financial information of one of the Malaysian biodiesel producers, Vance Bioenergy Sdn Bhd. (‘Vance’), was not a suitable source of undistorted SG&A and profit as the company produced also other products. In addition, the company claimed that the weight of the financial information of another company, FIMA BIODIESEL SDN BHD (‘FIMA’), in the basket should be adjusted as the financial information was only available for the first quarter of 2023, instead of full year 2022 as for the other six companies.

• (256) The Commission rejected the claims. First, the other products manufactured by Vance were by-products of biodiesel and therefore could not be considered a completely unrelated category of products. Second, the financial statements for FIMA were also available for a full year, but the company used as financial year the period from 1 April to 31 March.

3.2.2.4.   Level of social and environmental protection

• (257) Having established that Malaysia was the only available appropriate representative country, based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.

3.2.2.5.   Conclusion

• (258) In view of the above analysis, Malaysia met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

3.2.3.   Sources used to establish undistorted costs.

• (259) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the exporting producers and invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production mentioned in that note.