Commission Implementing Regulation (EU) 2025/58 of 15 January 2025 imposing a definitive anti-dumping duty on imports of certain pneumatic tyres, new or retreaded, of rubber, of a kind used for buses or lorries, with a load index exceeding 121 originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

• (135) Tyre companies also explicitly mention the influence of the CCP over their conduct. For instance, Qingdao Doublestar states in its 2023 annual report that: “[i]n 2023, the company continued to take Party building as the guide, high-quality development as the goal, actively implemented the "new four modernizations" strategy of ecology, high-tech, localization, and digitalization, focussed on the two main lines of business improvement and innovation breakthrough” and underlined “[n]ew achievements in Party building leadership: Adhere to party building leadership, focus on the main responsibilities and main business, develop and deepen education on the theme of Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era, strengthen political construction, consolidate grassroots Party building, and give full play to the role of branch committees in work groups and the role of Party members in the front line” ⁴⁹. Similarly, Shuangqian (double coin) Tire Group Co., Ltd mentions that “[u]nder the strong leadership of the company's Party Committee and the Board of Directors, all cadres and employees have strengthened their confidence, faced challenges head-on, overcome the impact of the industry cycle downturn, and made steady progress in the production and operation of the company, continuously improving its core competitiveness and accelerating the pace of building a world-class enterprise.” ⁵⁰ Finally, Guizhou Tyre Co., Ltd considers that “[a]s a state-owned holding company, the company always adheres to the "unwavering leadership of the Party over state-owned enterprises". The Articles of Association confirm the legal status of the Party organization in corporate governance and integrate the Party's leadership into all aspects of corporate governance.” ⁵¹

• (136) 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.

3.3.4.   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

• (137) 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.

• (138) 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 ⁵²) and the company shall provide the necessary conditions for the activities of the Party organisation.

• (139) 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 ⁵³, including exercising pressure on private companies to put “patriotism” first and to follow Party discipline ⁵⁴.

• (140) 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 ⁵⁵. Similar estimates were reported in 2022 ⁵⁶. 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.

• (141) 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’) ⁵⁷ was released, which further expanded the role of the Party committees in private enterprises.

• (142) 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 ⁵⁸.

• (143) The investigation confirmed that overlaps between managerial positions and CCP membership / Party functions exist also in the tyre sector. To provide an example, the several managers and/or board members of China National Tyre & Rubber Co. Ltd, Qingdao Doublestar, Shuangqian (double coin) Tire Group Co., Ltd, and Guizhou Tyre Co., Ltd are CCP members and hold positions in the secretariat of the Party Committee. ⁵⁹ This is also the case for the Chairman of the Board of Directors, General Manager, and members of the board of Aeolus, noting that one board member also serves as the financial director of China National Chemical Rubber Co., Ltd ⁶⁰

• (144) 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 ⁶¹. Thus, the state presence in firms, in the tyre and other sectors (such as the financial and input sectors) allows the GOC to interfere with respect to prices and costs.

3.3.5.   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

• (145) 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.

• (146) 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 ⁶².

• (147) The Chinese authorities have enacted a number of policies guiding the functioning of the sector of the product concerned.

• (148) The 14^th FYP on developing raw materials industry ⁶³ aims to achieve a breakthrough in key categories of raw materials “[f]ocusing on key application areas such as […] bionic synthetic rubber” ⁶⁴. Further provisions specific to the tyre industry are also included in the MIIT Guiding Opinion on promoting the high quality development of the Chemical and Petrochemical industries during the 14^th FYP, Shandong Province 14^th FYP on the development of the chemical industry as mentioned in recitals (128) and (129) above.

• (149) On the province level, similarly, according to the Anhui Province 14^th FYP on developing new materials industry ⁶⁵ the government authorities are set to shape the sector’s industrial layout as follows: “[f]ocusing on the automobile, electronics, high-speed railways, aerospace, and nuclear power sectors, andrelying on the industrial bases of Anqing, Huainan and other places, increase the intensity of research and development and of innovation, and vigorously develop rubber material products with special properties and processes such as high and low temperature resistance, aging resistance, ablation resistance, chemical medium resistance, weather resistance, ozone resistance, arc resistance, etc.”. It also mentions in the list of key products “hydrogenated nitrile rubber, brominated nitrile rubber, solution-polymerized styrene-butadiene rubber, isoprene rubber and its monomers, acrylate rubber, special fluorine-containing rubber, fluorosilicone rubber, electricity insulating silicone rubber” and in the list of breakthrough technologies “Nitrile rubber hydrogenation technology, carboxyl nitrile rubber preparation technology, functionalized SSBR production technology, synthetic rubber drying process energy-saving technology, emulsion polymerization concentration technology, environmentally friendly additive replacement technology, etc.” ⁶⁶.

• (150) Similarly, the Gansu province 14th FYP on developing raw materials industry ⁶⁷ includes a section on “fine chemical industry” which provides that “[b]y 2025, the total industrial output value of the industry will strive to reach 50 billion yuan” and that in the Synthetic rubber field, the objective is “[r]elying on backbone enterprises, [to] vigorously develop environmentally friendly rubber additives, rubber accelerator series CBS/MBS, carbon disulfide, insoluble sulfur, high-quality carbon black and other products” and for advanced petrochemical new materials “[r]elying on backbone enterprises,[to] improve the level and capacity of Gansu Province's in special engineering plastics, special synthetic rubber , [etc.]” and to “[v]igorously develop key strategic new materials”. In the field of petrochemicals, "develop engineering plastics, special synthetic rubber , special fibers, biodegradable high-performance materials and high-performance composite materials”.

• (151) The Gansu province 14^th FYP also mentions in its list of key projects the PetroChina Lanzhou Petrochemical Company and the building of a new 35 000 tonnes/year special nitrile rubber unit, mainly including chemical preparation unit, polymerization unit, monomer recovery unit, slurry storage, mixing unit and coagulation drying and packaging unit, etc, for a total investment of more than 84 million CNY ⁶⁸.

• (152) In the Jiangxi’s province 14^th FYP on the high-quality development of petrochemical industry ⁶⁹ states that “[We will…] expand the application scope of […] organosilicon products such as silicone oil, silicone rubber , (…) and white carbon black . We will strengthen the research and development and production of new chemical materials, and vigorously develop cutting-edge new materials such as special rubber (…)”. Concerning special rubber, it also provides that the government will “focus on the development of solution styrene butadiene rubber (SSBR), hydrogenated nitrile rubber, halogenated butyl rubber, hydrogenated styrene thermoplastic elastomers (HSBCs), isoprene rubber (IR), thermoplastic vulcanizate, ethylene propylene rubber (EPR), etc.”.

• (153) Finally, the Jilin province 14^th FYP on petrochemical industry development ⁷⁰ provides that the government will “fully promote the development of the new chemical materials industry such as engineering plastics, special synthetic rubber , and high-performance fibers, expand the application scope of new chemical materials in the fields of automobiles , rail transportation, aerospace, etc., and realize the high-quality development of the petrochemical industry system in our province” and “[s]trengthen the ten pillar products, iepolyethylene, ABS, acrylonitrile, methyl methacrylate, phenol/acetone, benzene, butyl octanol, ethylene oxide, ethylene propylene rubber , and fuel ethanol, refine special carbon fiber, highly active polyisobutylene, special rubber and plastic materials and other specialty products, (…) and form three major competitive sectors of " synthetic resin, synthetic rubber and basic organic chemical raw materials ", enhance the competitiveness and endogenous development momentum of the petrochemical industry, and help cultivate competitive product clusters and specific product chains”.

• (154) The annual report of the main tyre companies also mentions the existence of governmental subsidies or support. For instance, the annual report of Aeolus tyres states that the company benefited CNY 9,4 million in governmental subsidies in 2023, and 11 million in 2022 ⁷¹. Qingdao benefited from governmental subsidies of CNY 105,6 million in 2023, and 625 million in 2022 ⁷². Shuangqian (Double Coin) Tire Group Co., Ltd reported CNY 163 million in 2023 and CNY 760,8 million in 2022 ⁷³. Finally, Guizhou Tyre Co., Ltd’s annual report shows that the company received Government subsidies related to business operations of CNY 25,2 million in 2023 and 19,8 million in 2022 ⁷⁴.

• (155) 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.

• (156) 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.

3.3.6.   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

• (157) 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.

• (158) 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 ⁷⁵.

• (159) 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. ⁷⁶ 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 ⁷⁷. Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land ⁷⁸.

• (160) 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 tyre industry sector. The present investigation revealed nothing that would call those findings into question.

• (161) 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.

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

• (162) 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 ⁷⁹.

• (163) 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 ⁸⁰. 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.

• (164) 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 ⁸¹. Those findings lead to the distortion of wage costs in China.

• (165) No evidence was submitted to the effect that the tyre 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).

3.3.8.   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

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

• (167) First, the Chinese financial system is characterised by the strong position of state-owned banks ⁸², 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) ⁸³ and they regularly implement public policies designed by the GOC.

• (168) 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 ⁸⁴. 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.

• (169) 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 ⁸⁵. 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”. ⁸⁶

• (170) 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 ⁸⁷. This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important ⁸⁸. 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.

• (171) 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.

• (172) 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 ⁸⁹. Official media in China have recently reported that the CCP called for “guiding the loan market interest rate downwards” ⁹⁰. Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

• (173) 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.

• (174) 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.

• (175) 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.

• (176) In fact, the annual report and publicly available sources show that the main companies active in the tyre industry sector received support from policy banks. For instance, public sources mentioned that “Henan Branch of the Export-Import Bank of China has actively implemented the new development concept, adhered to the responsibility and mission of financial services for the real economy, and provided a credit of 1 billion yuan and a loan of RMB 300 million to Aeolus Tire Co., Ltd (hereinafter referred to as "Aeolus Tire") to help the company develop its export-oriented business and further improve its international market competitiveness”. ⁹¹ Similarly, media reported that “[o]n August 12, Doublestar Group and Industrial and Commercial Bank of China Qingdao Branch held a strategic cooperation signing ceremony at the Doublestar Global Model and Market Innovation Center, taking the bank-enterprise cooperation model of "co-development and co-growth" to a new level. Chai Yongsen, Secretary of the Party Committee and Chairman of Doublestar Group, Zhang Junhua, Deputy Secretary of the Party Committee and President, Cai Qian, Secretary of the Party Committee and President of Industrial and Commercial Bank of China Qingdao Branch, Li Xia, Member of the Party Committee and Deputy President, and other leaders attended the ceremony” and that “ICBC Qingdao Branch will continue to provide good financial services, increase credit and loan scale for Doublestar Group, and fully support the rapid development of Doublestar Group”, or that “[t]he development of Doublestar is inseparable from the strong support of ICBC” ⁹². Strong links with the Bank of Communications and the Bank of China have also been reported with articles stating that “Bank of Communications Qingdao Branch will take Doublestar Group as a key core customer, and around the future development of Doublestar Group, provide strong support in investment and financing credit lines, overseas Kumho Tire advanced manufacturing capacity upgrade projects and other aspects, to help Doublestar's "third entrepreneurship" and support Doublestar to become a world-class enterprise with high-tech, digitalization and social responsibility as soon as possible” and that “Yu Qun, secretary of the Party Committee and president of Bank of China Qingdao Branch, said that he would fully support the development of the real economy in Qingdao and increase the credit and credit scale of Doublestar Group to support its rapid development. After the signing, both parties will continue to expand their business cooperation, starting from the overall needs of Doublestar's future development, to achieve common development and growth, jointly foster new breakthroughs in their respective business scope, and achieve a "win-win" situation of mutual promotion between banks and enterprises”. ⁹³

3.3.9.   Systemic nature of the distortions described

• (177) 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.

• (178) 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 recitals (66) and (106). The Commission pointed out that the regulatory setup underpinning those distortions is generally applicable, tyre 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.

• (179) 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.

• (180) 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.

• (181) No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

3.3.10.   Representative country

3.3.10.1.   General remarks

• (182) 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 ⁹⁴;

• — production of the product under review in that country;

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

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

• (183) As explained in recitals (57) and (59), the Commission issued two notes for the file on the sources for the determination of the normal value: the First Note of 14 January 2024 and the Second Note of 16 July 2024.

• (184) These notes described the facts and evidence underlying the relevant criteria, and addressed the comments received by the parties on these elements and on the relevant sources.

• (185) In the Second Note, the Commission informed interested parties of its intention to consider Türkiye 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.

• (186) Based on the initial submissions received from the sampled exporting producers, the Commission decided to group the raw materials based on their weight in terms of production costs. Three categories were defined: the main raw materials representing in total more than 35 % of the total costs, the secondary raw materials representing in total more than 10 % and the last category with the other raw materials in terms of costs of production. These categories were then examined based on Global Trade Atlas ⁹⁵ import database to make sure that those are representative.

• (187) Moreover, the Commission examined if the raw materials were subject to restrictions (based on the OECD Inventory) on export restrictions on Industrial Raw Materials ⁹⁶, Global Trade Alert ⁹⁷ database and the Market Access Map ⁹⁸. No restrictions were identified for Türkiye.

3.3.10.2.   First Note

• (188) In the First Note, the Commission identified Brazil, Indonesia, Malaysia, Thailand, Türkiye and South Africa as countries with a similar level of economic development as the PRC according to the World Bank (i.e. “upper-middle income” countries on a gross national income basis) where production of the product under investigation was known to take place.

• (189) Based on the initial submissions from the sampled exporting producers, the Commission considered that Brazil and Türkiye had sufficient imports for most of the raw materials, and the overall imports were not significantly impacted by imports originating from China.

• (190) For the second criterion, the Commission identified readily available detailed financial statements in Brazil and in Türkiye: Vipal Borrachas S.A. ⁹⁹ in Brazil, and Brisa Bridgestone Sabancı Lastik Sanayi and Ticaret AŞ ¹⁰⁰ in Türkiye. Vipal Borrachas is a producer of tread materials while Bridgestone produces new tyres.

• (191) The Commission considered that the choice of Brazil more suitable as there was also production of new truck tyres.

• (192) The Commission invited comments on the reasoning used to find a representative country in the First Note.

3.3.10.3.   Claims made for each potential representative country following the issuance of the First Note

• (193) The Commission received comments from the Giti group, the Hankook group and from the Coalition against unfair tyres imports.

• (194) Giti claimed that the Commission did not present any proof for the assumption that the level of Chinese imports may affect the average import prices from non-China sources.

• (195) The Commission assessed the claim and considered that the level of Chinese imports in Malaysia is such that the volume of imports could not be considered as representative as it is likely to be affected by distortions, if the significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation are confirmed in the final disclosure. Given this risk and the fact that the Chinese imports into Türkiye were significantly lower, the Commission rejected the claim and confirmed the selection of Türkiye.

Brazil

• (196) Giti claimed as the Brazilian producer proposed to source the financial data (SG&A and profit) did not produce new tyres, it cannot be used for the purpose of the normal value calculation. Moreover, the Brazilian producer proposed, once removed the equity equivalence result from the Profit & Loss statement, reported an operational loss for the year 2022.

• (197) The Commission assessed the claim and confirmed that the proposed producer reported losses for the year 2022. Therefore, in addition to the analysis above, showing the absence of imports in Brazil for four products in the second category, when considering the fact there was no alternative financial data available, the Commission concluded that Brazil was not an appropriate representative country.

Indonesia

• (198) Giti claimed that Indonesia should not be disregarded because of insufficient or no imports for HS codes 4001 21 , 4001 22 and 4002 80 as an international benchmark could be used for replacing the values (i.e. the Singapore Commodities exchange). Giti did not explain why Indonesia could be an appropriate potential representative country and why Singapore Commodities exchange is a reliable source of data. Therefore, the Commission considered that this claim was not substantiated.

• (199) The Commission considered that in a situation where there was no reliable import value for a certain raw material (i.e. HS code 4001 22 ), it may refer to values obtained from other sources. However, in that particular case imports for the above raw materials were found for other potential representative countries.

• (200) Giti also claimed that considering a certain HS code was irrelevant in its case as it did not consume such raw material.

• (201) The Commission reminds that it established the list of factors of production based on the submissions made by all the sampled groups of exporting producers as the analysis had to be valid for all of them.

• (202) Therefore, in absence of imports data for Indonesia for the relevant codes and the availability of such data in other potential representative countries, the Commission cannot consider Indonesia as an appropriate representative country.

Malaysia

• (203) Giti claimed that Malaysia was used as the primary surrogate country by the US DoC ¹⁰¹ for the same type of products. Moreover, Malaysia is the only country for which there are significant imports at representative prices for all raw materials of the main category. In addition, the import prices of raw materials for the second category are also representative as they are in line with import prices in other countries for which the Commission has not raised any issues regarding representativeness or reliability. Furthermore, Malaysia does not suffer from high inflation, devaluation rates and high interest rates as compared with Türkiye. The party proposed the use of the financial data of Toyo Tyre Malaysia which was also used by the USDOC.

• (204) Regarding the producer proposed by the party, the Commission noted that, based on the corporate web site, Toyo Tyre Malaysia is not producing truck tyres ¹⁰² but light truck tyres (i.e. for SUVs and 4x4 vehicles) as the US proceeding mentioned did not concern truck tyres.

• (205) The Commission considered that given the significant volume of imports from China of the main inputs in Malaysia, the imports could not be considered representative since they are likely to be affected by distortions, if the significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation are confirmed in the final disclosure.

• (206) Given this risk, the Commission rejected the claim.

• (207) Following the final disclosure, Giti reiterated that Malaysia had stable economic conditions with a low inflation rate of 3,3 % in 2022 and a modest 10 % devaluation of its currency, making Malaysia a more suitable representative country.

• (208) As explained in recital (222), the Commission considered that the economic situation of a potential representative country should not be considered as a decisive negative factor. This is because the establishment of benchmarks is not directly affected by the economic situation of the country. The Commission's approach to setting benchmarks is based on import prices for raw materials, as well as the use of percentages for selling, general and administrative (SG&A) expenses and profit, which help to offset internal fluctuations. Additionally, energy costs are converted into Chinese yuan (CNY) using an exchange rate that reflects the evolution of the local currency against CNY. In light of this, the Commission considered Türkiye to be a suitable representative country. The claim was disregarded.

• (209) Following the final disclosure, Giti claimed that both Brisa Bridgestone and Goodyear Lastikleri primarily produced tyres for cars and light trucks, similar to the product under investigation. Therefore, the SG&A and profit benchmarks proposed were largely based on car and light truck tyres, making Toyo Tyre Malaysia a suitable reference.

• (210) The Commission's search for a representative country revealed that no country had a company that exclusively produced truck tyres. As mentioned in recital (204), Toyo Tyre Malaysia did not produce truck tyres, while Brisa Bridgestone and Goodyear Lastikleri manufactured truck tyres in their Turkish facilities. In light of this, the Commission decided to prioritize companies that produce truck tyres when establishing benchmarks for SG&A and profit. This approach ensures that the benchmarks are more relevant and representative of the industry.

Thailand

• (211) Giti claimed that Thailand should be the most suitable choice among those considered by the Commission. Giti and Hankook claimed that Thailand should not be disregarded because of insufficient or no imports for HS codes 4001 21 , 4001 22 and 4002 80 as an international benchmark could be used for replacing the values (i.e. the Singapore Commodities exchange or Statista) and that there were no provisions in the Basic Regulation requiring the use of import data. Moreover, Giti claimed that considering 4001 21 was useless in its case as it did not consume such raw material. The same party provided a list of three producers of truck tyres.

• (212) The Commission noted that Giti did not substantiate its claim and did not explain why Thailand is the most suitable choice for representative country, neither explain why Singapore Commodities exchange or Statista ¹⁰³ are reliable sources of information. The Commission recalls that it established the list of factors of production based on the submission made by all the sampled groups of exporting producers as the analysis had to be valid for all of them. Moreover, the Commission considered that in a situation of quasi-absence of imports for one of the main inputs from the main category mentioned above, Thailand cannot be considered as an appropriate representative country.

Türkiye

• (213) The Coalition against unfair imports claimed that the Commission did not consider that Türkiye imported significant amounts of inputs from Russia. The trade flows from Russia have been severely affected by the sanctions following Ukraine’s invasion in February 2022 and large volumes of products have been redirected to non-EU markets in commercial conditions that cannot ensure that free market conditions were maintained. Therefore, according to the Coalition against unfair imports Türkiye cannot be considered as appropriate representative country.

• (214) The Commission assessed the claim and found that there have been significant volumes of Russian imports in Türkiye of two HS codes of the main category (as defined in the First Note: 2803 00 and 4002 19 ). However, the party did not provide evidence that imports from Russia may render the imports into Türkiye unreliable. The Commission did not observe evidence of any abnormal price fluctuation for the import from Russia into Türkiye of the two HS codes that were not sold in significant discounts in comparison with average import price of that input in Türkiye. Therefore, the claim was disregarded.

• (215) Giti claimed that Türkiye imposed anti-dumping measures to protect its steel industry, and thus these measures distorted import prices of steel wire (an input for the production of tyres) and that in addition local producers of tyres enjoyed significant protection, i.e. anti-dumping measures on tyres, leading to artificially elevated profits. The Commission considered that the imposition of anti-dumping measures was not aimed at shielding local producers from competition but, on the opposite, it reestablished a normal competitive situation. Therefore, the claim was rejected.

• (216) Following the final disclosure, Giti claimed that the Commission did not address a claim made after the disclosure of the Second Note on FOP that the steel wire used in the product under investigation is a basic steel product typically sourced domestically while imports should reflect specialty products rather than general market trends. This distortion was evidenced by comparing Türkiye export price with import price which was roughly half the import price.

• (217) Giti claimed that a specific type of steel wire was used in the production of truck tyres, but failed to provide any evidence to support this claim. In the absence of such evidence, the Commission considered the claim to be speculative and therefore did not take it into account.

• (218) Regarding Türkiye, Hankook claimed that Brisa Bridgestone’s consolidated financial statements included Arvento subsidiaries which were involved in the development and manufacturing of mobile technologies. Therefore, Brisa Bridgestone was considered manifestly not representative for the purpose of the normal value construction. The party proposed the use of Goodyear Lastikleri Turk ¹⁰⁴ which would be more appropriate than Brisa Bridgestone as there was not consolidation of other type of activities.

• (219) Regarding Brisa Bridgestone and Arvento, the Commission noted that the party did not substantiate its claim, in particular regarding the impact of Arvento turn-over on the consolidated financial statements. Therefore, the Commission concluded that Brisa Bridgestone financial data remained an appropriate source for the establishment of the SG&A and profit percentages. Moreover, the Commission considered the claim concerning Goodyear Lastikleri Turk and concluded that the financial data of this producer of truck tyres could also be a source for the establishment of the SG&A and profit percentages to construct normal value in Türkiye, in addition to the data of Brisa Bridgestone. Indeed, the financial data of Goodyear Lastikleri Turk is readily available and its accounts are audited. Based on both producers, the weighted average rates for SG&A and profit, expressed as a percentage of the cost of goods sold, are 22,0 % and 10,8 % respectively may be considered as reasonable for such industry.

• (220) Therefore, the claim was rejected.

• (221) Giti and Hankook claimed that the economic conditions (such as high inflation, devaluation of the Turkish lira, increase of lending rates or energy price) affect the Turkish economy, and that the labour costs were impacted by political decision. In their view this could affect the reliability of indirect expenses and undermine the reliability of the normal value.

• (222) The Commission considered that the import prices were not impacted by the devaluation of the Turkish lira, the Commission considered that any increase will be reflected by an increase of the total costs of goods sold and/or SG&A expenses and thus in the decrease of the profit margin of the representative producer. As SG&A and profit margins were expressed in percentage, this had no impact on the calculation of the normal value. Regarding the inflation of certain specific costs, as labour or electricity, the Commission considered that the inflation reported in Türkiye is largely attenuated by the evolution of the exchange rate between Turkish lira and the Renminbi. Therefore, the claim was rejected.

• (223) Following the final disclosure, Giti argued that the Commission's approach to calculating SG&A expenses failed to account for the significant impact of currency devaluation on exports and imports, which were denominated in foreign currencies. In particular, Giti noted that the Commission's requirement to distinguish between realized and translation exchange gains/losses was not feasible, as the Turkish companies' financial data did not provide this level of detail.

• (224) The Commission also examined the potential impact of exchange gains or losses on the SG&A margin, but found no evidence in the file to suggest that it was significant. In any case, it is clear that any changes to the SG&A total amount would have a corresponding impact on the total profit amount, and therefore would not affect the final determination of the dumping margins. As a result, the claim was disregarded.

South Africa

• (225) For South Africa, Giti agrees with the Commission that South Africa does not appear to constitute a suitable representative country on account of the negligible imports for all factors of production.

• (226) The Commission therefore intends to consider Türkiye as representative country.

3.3.11.   The Second Note

• (227) Following the disclosure of the First Note, Hankook group revised several times its initial submission on factors of production. This resulted in the Commission revising the list of HS codes of each category described in the recital (186) and its initial analysis. After revision, the main category in the Second Note represented around 64 % of the direct material costs, and the second category of products represented around 22 % of the direct material costs.

• (228) Following the final disclosure, Giti claimed that the Commission failed to provide explanations on the reclassification of the HS code 4002 80 from category A to category B.

• (229) As mentioned in recital (227), the list of HS codes of each category was revised following the revision of Hankook factors of production. The methodology used for establishing each category was based on the weight of each HS codes as described in recital (186). Therefore, the Commission considered that the methodology used was explicitly disclosed to interested parties. The claim was disregarded.

• (230) As noted in recital (219), the Commission revised the list of HS codes for each category in response to the revision of Hankook's factors of production. This revision was made in accordance with the methodology described in recital (186), which is based on the weight of each HS code. The Commission had explicitly disclosed this methodology to interested parties, and therefore considered that the claim was unfounded. As a result, the claim was disregarded.

3.3.12.   Claims made following the issuance of the Second Note

• (231) In their comments, the Hankook group reiterated its claim that the consolidated financial statements could not be used (please refer to recital (218)) and the Commission had not provided any evidence to support the consideration of Brisa Bridgestone as a reliable source. Therefore, Hankook group considered that Brisa Bridgestone's financial data was unwarranted and unjustified.

• (232) The Commission found that Hankook group did not substantiate its claim with new evidence that the absorption of Arvento impacted the profit margin of Brisa Bridgestone. When Brisa Bridgestone and Goodyear Lastikleri Turk financial statements were consolidated, it provided a reasonable profit margin of 10,8 %, and thus it should be considered as the most appropriate benchmark available.

• (233) In their comments, Giti group reiterated its claim that Malaysia should not be disregarded as the country was selected in recent cases by the Commission and the US DoC. Giti group considered that Malaysia constituted a much more suitable representative country as the main inputs were imported in sufficient quantity. Furthermore, with regards to the selection of a producer in the representative country, the Giti Group considered that Toyo Tyre Malaysia could still be considered appropriate, even though it only produced SUV tyres. This was based on the fact that the Turkish producer, Goodyear Lastikleri Turk, did not exclusively produce truck tyres. Notably, in the first quarter 2023, tyres for cars accounted for 85 % of the number of tyres sold by exporting producer in the Union.

• (234) The Commission rejected the claim as Toyo Tyre Malaysia did not produce at all the product under review.

• (235) Regarding Türkiye, Giti group reiterated its claims on inflation and devaluation of the Turkish Lira, that electricity prices or labour costs were influenced by political factors, and tyres originating from various origins were subject to anti-dumping measures.

• (236) As no additional evidence was submitted by Giti group, the claim was disregarded.

3.3.13.   Level of social and environmental protection

• (237) Having established that Türkiye 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.

3.3.13.1.   Conclusion

• (238) In view of the above analysis, and in accordance with Article 2(6a)(a), first indent of the basic Regulation, the Commission considered Türkiye as the most appropriate representative country and Brisa Bridgestone consolidated financial statements and Goodyear Lastikleri Turk financial statements as an appropriate and reasonable source for financial data.

3.3.14.   Sources used to establish undistorted costs

• (239) 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 review by the sampled exporting producers and invited the interested parties to comment and propose readily available information on undistorted values for each of the factors of production mentioned in that note.

• (240) Subsequently, in the Second Note, the Commission stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use Global Trade Atlas (‘GTA’) to establish the undistorted cost of most of the factors of production, notably the raw materials. In addition, the Commission stated that it would use on one hand the Turkish Statistical Institute ¹⁰⁵ for establishing undistorted costs of labour, natural gas, liquefied natural gas (‘LNG’) and steam, and on the other hand the statistics provided by the Energy Market Regulatory Authority ¹⁰⁶ for establishing undistorted cost of electricity. The statistics provided by the Presidency of the Republic of Türkiye Investment Office ¹⁰⁷ will be used by the Commission for establishing undistorted cost of water.

• (241) The Commission informed that it would calculate the percentage of the consumables on the total cost of raw materials and apply this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks from the appropriate representative country.

3.3.14.1.   Factors of production

• (242) Considering all the information submitted by the interested parties and collected during the verification visits, the following factors of production and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 1

Factors of production

Factor of production	Commodity code in Türkiye	in CNY	Unit of measurement	Source of data
Raw materials	Raw materials	Raw materials	Raw materials	Raw materials
soya bean oil	150790	40,977	CNY/kg	Global Trade Atlas108
sulphur all kinds	250300	1,490	CNY/kg	Global Trade Atlas
kaolin	250700	1,710	CNY/kg	Global Trade Atlas
other clays	250840	1,672	CNY/kg	Global Trade Atlas
Magnesia, other magnesium oxide	251990	5,764	CNY/kg	Global Trade Atlas
other petroleum	271019	5,740	CNY/kg	Global Trade Atlas
Mineral waxes	271290	9,368	CNY/kg	Global Trade Atlas
carbon blacks	280300	10,448	CNY/kg	Global Trade Atlas
Silicon dioxide	281122	19,662	CNY/kg	Global Trade Atlas
zinc oxide	281700	7,491	CNY/kg	Global Trade Atlas
calcium carbonate	283650	3,637	CNY/kg	Global Trade Atlas
other cyclic hydrocarbons	290219	18,489	CNY/kg	Global Trade Atlas
other organo-sulphur compounds	293090	25,540	CNY/kg	Global Trade Atlas
other artificial waxes and prepared waxes	340490	20,000	CNY/kg	Global Trade Atlas
prepared rubber accelerators	381210	38,299	CNY/kg	Global Trade Atlas
compound plasticisers for rubber or plastics	381220	16,826	CNY/kg	Global Trade Atlas
mixtures of oligomers of 2,2,4-trimethyl-1,2-dihydroquinoline	381231	22,786	CNY/kg	Global Trade Atlas
other anti-oxidising preparations and other compound stabilisers for rubber or plastics	381239	27,414	CNY/kg	Global Trade Atlas
stearic acid	382311	10,265	CNY/kg	Global Trade Atlas
other chemicals	382499	25,565	CNY/kg	Global Trade Atlas
polymers of styrene	390390	14,054	CNY/kg	Global Trade Atlas
melamine resins	390920	20,405	CNY/kg	Global Trade Atlas
phenolic resins	390940	20,553	CNY/kg	Global Trade Atlas
petroleum resins, coumarone, indene or coumarone-indene resins and polyterpenes	391110	18,458	CNY/kg	Global Trade Atlas
smoked sheets	400121	14,692	CNY/kg	Global Trade Atlas
technically specified natural rubber	400122	12,769	CNY/kg	Global Trade Atlas
synthetic rubber	400219	15,197	CNY/kg	Global Trade Atlas
synthetic rubber	400220	14,566	CNY/kg	Global Trade Atlas
synthetic rubber	400239	22,528	CNY/kg	Global Trade Atlas
synthetic rubber	400270	20,992	CNY/kg	Global Trade Atlas
synthetic rubber	400280	7,945	CNY/kg	Global Trade Atlas
reclaimed rubber in primary forms or in plates, sheets or strip	400300	3,477	CNY/kg	Global Trade Atlas
rubber compounded with carbon black or silica	400510	16,169	CNY/kg	Global Trade Atlas
Single cotton yarn	520523	25,243	CNY/kg	Global Trade Atlas
Single cotton yarn	520622	33,186	CNY/kg	Global Trade Atlas
tyre cord	590210	50,004	CNY/kg	Global Trade Atlas
tyre cord	590220	28,808	CNY/kg	Global Trade Atlas
tyre cord	590290	84,159	CNY/kg	Global Trade Atlas
Wire of iron Plated or coated with base metals other than zinc	721730	14,224	CNY/kg	Global Trade Atlas
stranded wire, ropes and cables	731210	24,539	CNY/kg	Global Trade Atlas
Labour	Labour	Labour	Labour	Labour
labour cost per man-hour	N/A	69,20	man per hour	The Turkish Statistical Institute
Energy	Energy	Energy	Energy	Energy
coal	270111	1,700	CNY/kg	Global Trade Atlas
electricity	N/A	1,180	CNY/kWh	The Turkish Statistical Institute
natural gas	N/A	5,02	CNY/M3	The Turkish Statistical Institute
steam gas	N/A	2 361	CNY/Tonne	The Turkish Statistical Institute
water	N/A	4,957	CNY/m3	Presidency of the Republic of Türkiye Investment Office

3.3.14.2.   Raw materials

• (243) In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA to which import duties and transport costs were added. The import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 of the European Parliament and the Council ¹⁰⁹. The Commission decided to exclude imports from the PRC into the representative country as it concluded in Section 3.2 that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(a) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices. After excluding imports from the PRC into the representative country, the volume of imports from other third countries remained representative.

• (244) The Commission expressed the transport cost incurred by the cooperating exporting producers for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport cost. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

• (245) Following the final disclosure, Giti claimed that the Commission wrongly disregarded its purchases of natural rubber when directly imported and invoiced in foreign currencies.

• (246) The Commission noted that, even if it were to use the cost of the purchases of natural rubber when directly imported and invoiced in foreign currencies, the dumping margin would only decrease by approximately 2 % while remaining well-above de minimis, thereby not changing the overall finding of continuation of dumping. Accordingly, the Commission did not further address the claim.

3.3.14.3.   Labour

• (247) The Turkish Statistical Institute publishes detailed information on wages in different economic sectors in Türkiye ¹¹⁰. The Commission established the benchmark based on the latest available statistics covering 2022 for average hourly labour costs for the economic activity ‘Manufacture of rubber tyres and tubes products’ NACE code C.22 according to NACE Rev.2 classification and a headcount category of more than 1 000 employees. The values were further adjusted for inflation using the labour cost index published by the Turkish Statistical Institute ¹¹¹ to reflect the costs in the investigation period.

• (248) Following the final disclosure, Giti claimed that the benchmark used appeared to be inflated compared with other recent cases.

• (249) The Commission reviewed the claim and found no evidence of calculation errors. The party's references to other cases in different industries, such as steel ropes and cables, melamine, and tungsten carbide, did not provide a basis for challenging the Commission's calculations. The differences observed in these cases can be attributed to the distinct characteristics of each industry. The claim was disregarded.

3.3.14.4.   Electricity

• (250) The price of electricity for companies (industrial users) in Türkiye is published by the Energy Market Regulatory Authority (EMRA) ¹¹² in Türkiye. The Commission used the data on the industrial electricity prices that EMRA mandated to be applied as of 1 January 2023, net of VAT as the Turkish producers of the product under investigation are entitled at its reimbursement.

3.3.14.5.   Natural gas and steam gas

• (251) The price of natural gas for industrial users in Türkiye is published by the Turkish Statistical Institute. The Commission used the price available for the second semester of 2021 and the first semester of 2022 corresponding to the consumption band of 2 610 000 – 26 100 000 m^3 113. This price was further adjusted for inflation using the Producer Price Index published by the Turkish Statistical Institute ¹¹⁴ to reflect the price in the investigation period. The VAT, which is included in the published price, was deducted as the Turkish producers of the product under investigation are entitled at its reimbursement .

• (252) For steam gas, the benchmark was derived from the natural gas benchmark using a conversion ratio. Specifically, under standard conditions, it is estimated that approximately 0,421 tonnes of natural gas are consumed to produce 1 tonne of steam gas.

3.3.14.6.   Water

• (253) The Presidency of the Republic of Türkiye Investment Office ¹¹⁵ published the cost of water for industrial use. The Commission used the price valid in 2023 for the Balikesir region where Sisecam Elyaf is located, net of VAT as the Turkish producers of the product under investigation are entitled at its reimbursement.

3.3.14.7.   Manufacturing overhead costs, SG&A and profits

• (254) According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

• (255) The manufacturing overheads incurred by the cooperating exporting producers were expressed as a percentage of the costs of manufacturing actually incurred by the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

• (256) For establishing an undistorted and reasonable amount for SG&A costs and profit, the Commission used the readily available financial data, for the review investigation period of the Turkish producers Brisa Bridgestone and Goodyear Lastikleri Turk mentioned in recital (238) above.

• (257) Based on the consolidated financial statements of Brisa Bridgestone and the financial statements of Goodyear Lastikleri, the weighted average rates for SG&A and profit, expressed as a percentage of the cost of goods sold, are 22,0 % and 10,8 % respectively. These rates were considered reasonable for the tyres industry.

• (258) Following the final disclosure, Giti claimed that the Commission used as profit margin a benchmark reflecting the profit of tier 1 brand companies, and thus cannot constitute a reasonable benchmark for them.

• (259) As mentioned above in recital (257), the Commission relied on the available information and set a margin of 8,1 % (expressed as a percentage of total revenue). Although a calculation based on the three tiers was not feasible, the Commission considered that this margin was close to a weighted average between tier 1 and tier 2 as Bridgestone and Goodyear do not produce only tier 1 truck tyres but also tier 2 truck tyres under different brand names. However, the Commission considered that this benchmark was reasonable for the purposes of an expiry review. This is because an exact margin is not required in such a review. As a result, the claim was disregarded.

• (260) After the disclosure, Hankook reiterated that the financial statements of Brisa Bridgestone should not be used for the purpose of the dumping calculation and that Hankook presented arguments at different stages of the investigation. Hankook considered that the Commission did not address its arguments and thus hindered Hankook rights of defence given that its claim was evidently not assessed to the standard required by the fundamental principles of good and sound administration.

• (261) Hankook claimed that the reasons invoked by the Commission to justify the use of Brisa Bridgestone are mere speculations unsupported by evidence and the Commission failed to substantiate its own choice and to satisfy the required standard proof to identify a representative value for the SG&A expenses and profit as mandated by Article 2(6a) of the basic Regulation.

• (262) The General Court recently confirmed this principle as it reiterated the fundamental principle that the party seeking to rely on a claim bears the corresponding burden of proof. ¹¹⁶ In this specific case, since the relevant SG&A expenses and profits are not those of Hankook Group, it is the Commission that must prove that these figures are “appropriate”, as required by Article 2(6a). Thus, it is for the Commission to provide consistent evidence that the choice of Türkiye as a representative country, and the choice of – inter alia - Brisa Bridgestone as a representative local producer, is appropriate and justified pursuant to Article 2(6a) of the basic Regulation — and not for the interested parties to demonstrate the opposite.

• (263) Hankook claimed that the Commission decided to exclude the Malaysian producer due to the fact it was also active in other sectors.

• (264) Hankook claimed that it is for the Commission to prove its choice of representative local producer is appropriate pursuant to Article 2(6a) of the basic Regulation and not for the interested parties to prove the contrary.

• (265) The consolidated figures of Brisa Bridgestone involved a variety of different products, including some which are blatantly unrelated to the investigation and therefore it makes them unrepresentative within the meaning of Article 2(6a) of the basic Regulation.

• (266) Hankook claimed that the Commission failed to explain why the use of the financial statements of Brisa Bridgestone was necessary. Moreover, Hankook clarified that the use of financial statements of Goodyear Lastikleri was never questioned and therefore there was no need to add another company.

• (267) These claims had to be disregarded. The Commission considered that Brisa Bridgestone was a representative producer in the representative country as (i) it produces the product concerned, (ii) it had available financial data for the period considered and (iii) its SG&A and profit did not appear disproportionately high and thus were deemed as appropriate. On the contrary, Hankook did not provide any evidence that the consolidation of other activities in the financial statement of Brisa Bridgeston resulted in abnormal SG&A and profit. Therefore, having available financial data for two producers of the product concerned in Turkey, the Commission found no elements to exclude one or the other.

• (268) As regards the argument on the exclusion of the Malaysian producer, as explained above in recital (234), it did not produce at all the product concerned, as opposed to the two producers identified in Turkey.

• (269) Hankook and Giti claimed that the Commission wrongly established the SG&A as certain expenses, such as transport and storage costs, were not removed from the total amount of the SG&A amounts. Moreover, Hankook and Giti claimed that other type of expenses should be also removed from the SG&A such as commission expenses or marketing expenses.

• (270) The Commission reviewed the claims and determined that a revision to the SG&A percentage was necessary. Regarding the methodology applied, the Commission used its standard methodology for establishing the SG&A percentage net of transportation expenses: from the total revenue, the costs of good sold and the profit were removed, then the transportation expenses were deducted.