Commission Implementing Regulation (EU) 2025/1151 of 11 June 2025 imposing a definitive anti-dumping duty on imports of vanillin originating in the People’s Republic of China

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	2025/1151	12.6.2025

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union ¹ (‘the basic Regulation’), and in particular Article 9 thereof,

After consulting the Member States,

Whereas:

1. PROCEDURE

1.1.   Initiation

• (1) On 24 May 2024 the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of vanillin originating in the People’s Republic of China (‘the country concerned’ or ‘the PRC’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union ² (‘the Notice of Initiation’).

• (2) The Commission initiated the investigation following a complaint lodged on 9 April 2024 by Syensqo (‘the complainant’). The complaint was made on behalf of the Union industry of vanillin in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

1.2.   Registration

• (3) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2024/2716 (‘the registration Regulation’) ³.

1.3.   Interested parties

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

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

1.4.   Claims on Initiation

• (6) One user, Frey & Lau GmbH (‘Frey & Lau’), which is also an importer, registered as an interested party but did not submit a questionnaire reply. It expressed its opposition to the initiation of the investigation. Its arguments have been summarised below.

• (7) Frey & Lau submitted that, since the complainant Union producer did not manufacture all types of vanillin, it could not constitute the Union industry for those types of vanillin that it did not manufacture. It also referred to imports by the complainant Union producer itself as a factor to undermine its status as a genuine Union producer. This claim is addressed under Section 4.1 below.

• (8) As addressed in more detail in Section 2.4 and 4.1 below, the complainant Union producer could constitute the Union industry as per the basic Regulation, since its production of the like product constituted more than 98 % of total Union production of the like product as defined in recitals (41) and (44). Therefore, the Union producer constitutes the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation for the like product defined in the aforementioned recitals.

• (9) Frey & Lau claimed that the calculations of the normal value presented by the complainant are incorrect since the theoretical Bill of Materials used for ethylvanillin and synthetic vanillin should not be considered for Brazil, the representative country proposed by the complainant, as there is no production of such product types of vanillin in that country. Frey & Lau also claimed that the complainant calculated the dumping margin for two products which are not produced in the Union, notably ethylvanillin and bio-vanillin, and that the calculation of a single dumping margin for all types of vanillin is not appropriate given the different price ranges of the four types of vanillin. In their claim, Frey & Lau proposed to use India as the appropriate representative country. It submitted that India would be suitable as representative country as it would have a similar level of economic development as China, export prices of vanillin from India would be comparable to those from China and there would be production of vanillin in India.

• (10) The Union industry replied to the comments submitted by Frey & Lau on the complaint, clarifying that the calculations of the normal value and dumping margin are in accordance with Article 2(6a) of the basic Regulation. On this issue, the Commission noted that Frey & Lau did not submit evidence to support its allegation that the calculations of the normal value and dumping margin by the Union industry are erroneous, nor did it submit revised calculations. Its claim was therefore rejected.

• (11) The Commission noted that India does not belong to the group of countries within the same level of economic development as China, as per definition of the World Bank. China is considered an upper-middle income country, whereas India is considered a lower-middle income country. Therefore, the claim to consider India as representative country was rejected.

1.5.   Sampling

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

1.5.1.   No sampling of Union producers

• (13) As mentioned in the Notice of Initiation, the Commission made available questionnaires to the only two known Union producers, namely to the complainant and Ennolys. Sampling of Union producers was not considered necessary.

1.5.2.   Sampling of importers

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

• (15) Two unrelated importers came forward and submitted questionnaires replies. Only one of them provided the requested information and agreed to be included in the sample. In view of the limited number of replies, the Commission considered that sampling was not necessary.

• (16) The Commission received questionnaires replies from two users that also were importers, one of which is referred to in the previous recital. See Sections 7.2 and 7.3 below.

1.5.3.   Sampling of exporting producers in the PRC

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

• (18) Six exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. The selected sample consisted of two exporting producers Jiaxing Zhonghua Chemical Co., Ltd (‘Jiaxing Zhonghua’) and Jiangxi Brother Pharmaceutical Co. (‘Jiangxi Brother’), Ltd. In accordance with Article 17(2) of the basic Regulation, all known exporting producers and the authorities of the country concerned were consulted on the selection of the sample. The Commission received no comments on the selected sample and the sample was therefore confirmed on 11 June 2024.

• (19) In the course of the investigation, the Commission established that the Brother Holding, owner of majority stake of the shares of Jiangxi Brother, owns also a significant stake of the shares of Jiaxing Zhonghua. Both parties declared that they do act independently from one another. However, the Commission concluded that because of a third party directly or indirectly owning, controlling or holding 5 % or more of the outstanding voting stock or shares of both exporting producers, the latter have to be considered related within the meaning of Article 127(d) of Commission Implementing Regulation (EU) 2015/2447 ⁴.

• (20) Following disclosure of definitive findings, Jiangxi Brother contested the Commission’s conclusion that Jiangxi Brother and Jiaxing Zhonghua should be treated as related parties. It reiterated that both companies operate independently and are not in any meaningful way connected in terms of ownership, management or market conduct and in practice they are direct competitors in the vanillin market. However it did not put into question the Commission’s assessment that a third party directly or indirectly owns, controls or holds 5 % or more of the outstanding voting stock or shares of both exporting producers. The claim was therefore rejected.

• (21) In view of the facts explained in recital (19), the final sample consists of two related entities.

1.6.   Individual examination

• (22) As mentioned in recital (28), on 20 December 2024, in accordance with Article 19a(2) of the basic Regulation, the Commission informed interested parties by a Note to the File of its intention not to impose provisional measures. As explained in the Note to the File, this decision was due to the technical complexity of the case. In other words, in view of this technical complexity, the workload associated with the sampled exporting producers was already such that it precluded the imposition of provisional measures. Against this background, the Commission decided that any individual examinations would be unduly burdensome and would jeopardise the timely completion of the investigation within the meaning of Article 17(3) of the basic Regulation. In the definitive disclosure, the Commission explained that one non-sampled exporting producer in the PRC – Xiamen Oamic Biotech Co., Ltd (‘Oamic’) – had requested individual examination under Article 17(3) of the basic Regulation. However, it stated that the company had failed to submit a questionnaire reply within the deadline set by the Commission. In its comments on the definitive disclosure, Oamic pointed out that this statement was factually incorrect, as it had submitted a questionnaire reply. Whilst the Commission acknowledged its clerical error and the fact that Oamic was correct, nevertheless, this does not alter the conclusion that, due to the complexity of the case and the workload arising from the sampled exporting producers, any individual examinations would have been unduly burdensome and would have prevented the investigation from being completed in a timely manner. Accordingly, the request for individual examination submitted by Oamic was rejected.

1.7.   Questionnaire replies and verification visits

• (23) The Commission sent questionnaires to the known Union producers, users and the sampled exporting producers. The same questionnaires were made available online on the day of initiation.

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

• (25) Questionnaire replies were received from the complainant Union producer, two Union users and the sampled exporting producers in the PRC.

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

Union producer

• — Syensqo (Name of manufacturing entity: Specialty Operations France S.A.S.), Saint Fons, Lyon, France

Union user

• — Lucta S.A., Barcelona, Spain

Exporting producers in the PRC

• — Jiaxing Zhonghua Chemical Co., Ltd, Jiaxing City, China

• — Jiangxi Brother Pharmaceutical, Co., Ltd Pengze town, China.

1.8.   Investigation period and period considered

• (27) The investigation of dumping and injury covered the period from 1 January 2023 to 31 December 2023 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).

1.9.   Non imposition of provisional measures

• (28) Pursuant to Article 7(1) of the basic Regulation, the deadline for the imposition of provisional measures was 24 January 2025. On 20 December 2024, in accordance with Article 19a(2) of the basic Regulation, the Commission informed the interested parties of its intention not to impose provisional measures.

1.10.   Subsequent procedure

• (29) The Commission continued to seek and verify all the information it deemed necessary for its final findings.

• (30) When reaching its definitive findings, the Commission considered the comments submitted by interested parties.

• (31) On 8 April 2025, the Commission informed all interested parties of the essential facts and considerations, on the basis of which it intended to impose a definitive anti-dumping duty on imports of vanillin originating in the People’s Republic of China (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure. Following the assessment of a comment submitted by the exporting producer Oamic, a supplementary disclosure was sent to all parties on 16 April 2025 (‘supplementary final disclosure’).

• (32) Following the disclosure of definitive findings, the Commission received submissions from Arethia Services Germany GmbH & Co. KG (‘Arethia’), a newly registered interested party (user); the user Frey & Lau; the complainant, the Chinese exporting producers Jiangxi Brother, Oamic and Chongqing Thrive Fine Chemicals Co., Ltd. (‘Thrive’); Orchidlinn Biotech Co. Ltd (‘Orchidlinn’), a producer of the product concerned that did not export to the Union during the investigation period. Orchidlinn requested a hearing in the presence of the Hearing Officer in trade defence proceedings, which was held on 13 May 2025. Also, a hearing took place with Oamic on 23 April 2025.

• (33) Orchidlinn informed the Commission that it was preparing a new exporter review request to be submitted once measures would be imposed. It considered that the Commission had changed its conclusion on sampling after it had realised and corrected the erroneous description of Oamic’s situation, as explained in recital (22). However, it held that the sampling procedure and the determination of the individual examination constitute two distinct and legally sequenced procedures, whereas the sampling procedure comes first and the individual examination findings are made subsequently. It argued that a change in the second step, individual examination, cannot result in a change in the preceding step, which is sampling.

• (34) The Commission agreed that, in view of the correction made with regard to Oamic as mentioned in recital (33), it had also discovered and corrected a clerical error in the preceding paragraph of the final disclosure document. That paragraph concerned sampling and was replaced by a paragraph which is reflected in recital (22) of this regulation. Interested parties were thus fully informed on the correction in the supplementary final disclosure document. Orchidlinn argued that the Commission had failed to justify why it considered that sampling had not been abandoned, as it had erroneously stated in the document issued on 8 April 2025. However, as mentioned in recital (18) above, in the course of the proceeding, the Commission informed interested parties that six exporting producers had come forward in the sampling exercise ⁵ and that it had selected a sample of two which, absent of any comments, it had shortly afterwards confirmed to interested parties ⁶. At no later stage it had revoked or abandoned that sample. The mentioning of abandoning sampling in the document sent to interested parties on 8 April 2025 was thus clearly erroneous and the Commission made use of the sending of the supplementary final disclosure document, on 16 April, to correct also that clerical mistake.

• (35) Orchidlinn also submitted that the sample lacked representativity, as the product type it produces, natural vanillin, is not produced by either one of the sampled parties. With regard to this claim, as concluded in the analysis under Section 2.4, the Commission had concluded that the scope of the investigation was correctly defined and the four product types, natural vanillin being one of them, are substitutable and in direct competition with each other. The Commission further reiterated that the sample had been selected on the basis of Article 17(1) of the basic Regulation, i.e. by selecting the largest representative volume of exports which can reasonably be investigated within the time available. A sample representing more than 80 % of imports is by all means representative.

• (36) Finally, Orchidlinn urged the Commission that, if the Commission would maintain that sampling has been applied, it would nevertheless allow new exporting producers of natural vanillin to seek for individual dumping margins through a new exporter review as that product type is not produced by the sampled parties. The Commission failed to see any legal basis for such course of action as Article 11(4) of the basic Regulation, which regulates the determination of individual margins of dumping for new exporting producers, explicitly mentions that it does not apply where duties have been imposed under Article 9(6) of the basic Regulation, i.e. where sampling has been applied. In any event, the possibility to request refunds periodically in accordance with Article 11(8) remains possible.

• (37) Oamic claimed that the Commission’s Note for the File of 20 December mentioned in recital (28) did not comply with the requirement under Article 19(a)(2) as Oamic was through that Note not informed whether its request for individual examination had been accepted or not. However, Article 19(a)(2) obliges the Commission to inform interested parties on the non-imposition of provisional measures within a certain time limit, not to provide them with an interim report. Moreover, as already stated in recital (22), the Note mentioned that the non-imposition of provisional measures had been due to the technical complexity of the case. The Commission finally observed that Oamic had never inquired whether the Commission intended to assess the request for individual examination or contacted the Commission between the submission of its request for individual examination, on 3 July 2024, and its comments to the final disclosure, submitted on 11 April 2025. The claim was rejected.

• (38) Oamic submitted that the two sampled parties should have been treated, in accordance with Article 9(5) of the basic Regulation, as a single group entity. Therefore, it argued, sampling had indeed not been necessary. It understood that the weighted average duty rate under the sampling provision means that the margin of dumping shall be calculated on the basis of (at least) two unrelated, separate and independent cooperating parties.

• (39) With regard to this claim, the Commission confirmed that sampling had been applied, as six exporting producers had come forward and the Commission had selected the largest two companies amongst those to form the sample. Parties had also been informed accordingly and accepted that decision, as recalled in recital (34) above. Dumping and injury calculations had been made for and disclosed to each of the two parties individually, as the Commission found that Jiangxi Brother and Jiaxing Zhonghua did in practice not operate as one single entity. That is different from situations where there are close operational links between related parties and normal value, export price, dumping and injury are therefore calculated by combining the relevant financial data from the companies concerned and only one dumping and one injury calculation is made for the group. Pursuant to the provisions of Article 127(d) of Implementing Regulation (EU) 2015/2447, however, the Commission considered them related (see recitals (19) to (21)). Thus, Jiangxi Brother and Jiaxing Zhonghua should be attributed the weighted average duty of the two of them, and the same weighted average duty was attributed to the non-sampled cooperating parties, for the reasons explained in recital (187).

• (40) The comments from the other parties mentioned in recital (32) are addressed in the appropriate sections in this regulation.

2. PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under investigation

• (41) The product subject to this investigation is vanillin with the molecular formula C8H8O3 or C9H10O3, and with a purity level higher than 95 % by weight (‘the product under investigation’). The product under investigation includes Synthetic Vanillin, Natural Vanillin, Bio-sourced Synthetic Vanillin (Biovanillin) and Ethylvanillin. The Chemical Abstracts Service Registration number (CAS number) for Synthetic Vanillin, Natural Vanillin and Bio-sourced Synthetic Vanillin (Biovanillin) is 121-33-5. The CAS number for Ethylvanillin is 121-32-4. The product under investigation does not cover mixtures of different aroma chemicals containing concentrations of Vanillin below 95 % by weight.

• (42) Vanillin is used in the food (aroma and flavours) and cosmetic (fragrances) sector by way of an ingredient in the users’ recipes.

2.2.   Product concerned

• (43) The product allegedly being dumped is the product under investigation, originating in the PRC, currently classified under CN codes ex 2912 41 00 for Synthetic Vanillin, Natural Vanillin and Bio-sourced Synthetic Vanillin and ex 2912 42 00 for Ethylvanillin (TARIC codes 2912 41 00 10 and 2912 42 00 10) (‘the product concerned’).

2.3.   Like product

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

• — the product concerned when exported to the Union,

• — the product under investigation produced and sold on the domestic market of PRC, and

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

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

2.4.   Claims regarding product scope

• (46) The user Frey & Lau, which is also an importer of the product concerned, claimed that the types of vanillin described in recital (43) could not be treated as one single product and hence could not be treated as ‘the product concerned’. It argued that there are large differences between synthetic vanillin, natural vanillin, bio-sourced synthetic vanillin (‘biovanillin’) and ethylvanillin, in terms of quality, price and flavour intensity. These products are used in different ways and in different quantities among customers that may use them also to prepare, inter alia, components for manufacturers of fragrances and food and baking mixtures.

• (47) Frey & Lau substantiated its claim by pointing at differences in declaration obligation and regulatory compliance that Frey & Lau and the downstream brand owner must meet, and any switch between the types of vanillin that would require a significant amount of regulatory work and extensive analyses of differences in flavour profiles and intensities. Frey & Lau submitted that the complainant could therefore not constitute the Union industry within the meaning of the basic Regulation for those types of vanillin that it did not manufacture in the Union, since it only manufactured synthetic vanillin and natural vanillin during the investigation period, and only natural vanillin since May 2024. Consequently, biovanillin and ethylvanillin should be excluded from the scope of the investigation, as well as synthetic vanillin since the production thereof halted in the Union in May 2024.

• (48) In reply to these comments, the Union industry considered that, while certain differences exist between the four types of vanillin, this does not preclude them from constituting a single product for the purposes of an anti-dumping investigation and falling under one single scope therein. It submitted that all types of vanillin are man-made, are used for the same purposes and share the same basic physical, chemical and technical characteristics, as follows:

Table 1

Type of Vanillin	CN Code	Chemical molecular formulas	Chemical Abstract Number (CAS)	Origin of raw material
Synthetic vanillin	2912 41 00	C8H8O3	121-33-5	Crude Oil
Natural vanillin	2912 41 00	C8H8O3	121-33-5	Bio-fuel
Bio-sourced synthetic vanillin (‘biovanillin’)	2912 41 00	C8H8O3	121-33-5	Bio-fuel
Ethylvanillin	2912 42 00	C9H10O3	121-32-4	Crude Oil

• (49) The Commission recalled that the definition of the like product in Article 1(4) of the basic Regulation is a product which is identical i.e. alike in all respects to the product under consideration or, in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration.

• (50) The Commission considered that the scope of the investigation is correctly defined, since all types of vanillin are man-made molecules with a smell and taste resembling vanilla. All types of vanillin are used in a similar way and for the same purpose, namely, to constitute an input in inter alia fragrances and food recipes. The four product types are substitutable and in direct competition with each other. Therefore, excluding any of the types of vanillin would likely render a potential measure ineffective.

• (51) Concerning whether the Union industry has met the legal requirement for standing pursuant to Article 5(4) of the basic Regulation, the Commission refers to recitals (189) onwards of this Implementing Regulation.

• (52) Following disclosure of definitive findings, Frey & Lau reiterated its opposition against the definition of the product concerned. Also, the non-sampled exporting producer Thrive submitted its opposition against the said definition.

• (53) Frey & Lau and Thrive claimed that ethylvanillin cannot be considered to be a like product to synthetic vanillin. They also claimed that bio-sourced vanillin and natural vanillin carry a considerably higher production cost, and a corresponding higher sales price, than synthetic vanillin, and occur in much smaller quantities on the Union market. Hence, these can neither be considered a like product to synthetic vanillin.

• (54) One additional user, Arethia, which hitherto did not make itself known nor submitted a questionnaire, also submitted comments. It echoed the view of Frey & Lau (see recitals (46) and (47)) that ethylvanillin is a separate product compared to synthetic vanillin and natural vanillin.

• (55) As listed in the Table under recital (48) above, the Commission recognises that there are minor chemical differences between the different types of vanillin and that they are not alike in all respects.

• (56) Nevertheless, as stressed above, all types of vanillin are used in a similar way and for the same purpose, namely, to constitute an input in inter alia fragrances and food recipes. To this end, excluding one type of vanillin may undermine the effectiveness of the anti-dumping measures, as downstream users may adapt their recipes and doses of the type of vanillin that is exempted from measures.

• (57) The Commission recognises that the risk for substitution of one type of vanillin to another is not immediate since the user’s process of adapting recipes entail significant testing before release, as already emphasised by Frey & Lau in recital (47). But since measures are proposed for a five-year period, the effectiveness of anti-dumping measures must be assessed taking a longer term perspective.

• (58) On this basis, the Commission considered that all types of vanillin mentioned in the complaint and in recital (42) constitute the like product within the meaning of Article 1(4) of the basic Regulation.

3. DUMPING

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

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

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

• (61) In order to obtain information deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.6 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

• (62) Following the initiation, the Commission received comments regarding the applicability of Article 2(6a) of the basic Regulation from Frey & Lau, Jiangxi Brother and Thrive. These comments are addressed in Section 3.2.2. below.

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

• (64) On 21 October 2024, the Commission informed by a note to the file (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials and inputs, labour and energy used in the production of vanillin. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified two possible representative countries, namely Brazil and Türkiye. The Commission received comments on the First Note from the complainant, the sampled exporting producer Jiangxi Brother and Thrive. The comments are addressed in the relevant sections below.

• (65) On 3 January 2025, the Commission addressed the comments received from interested parties on the First Note in a second note to the file (‘the Second Note’) and informed interested parties on the relevant sources it intended to use for the determination of the normal value, with Brazil as the representative country. It also informed interested parties that it would establish selling, general and administrative (‘SG&A’) costs and profits based on available information for the companies Dexxos Participações S.A. and Prox do Brasil.

• (66) The Commission received comments to the Second Note from the complainant and from the exporting producers Jiaxing Zhonghua and Thrive referring to the sources used to establish undistorted costs in the representative country. These have been addressed under the respective headings of Section 3.4 below.

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

3.2.   Normal value

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

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

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

3.2.1.   Existence of significant distortions

• (71) In recent investigations concerning the chemical sector ⁷ in the PRC ⁸, the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

• (72) In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles ⁹. In particular, the Commission concluded that in the chemical sector not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation ¹⁰, but the GOC is also in a position to interfere with prices and costs through state presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation ¹¹. The Commission further found that the state’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being concentrated in sectors designated as strategic or otherwise considered as politically important by the GOC, rather than being allocated in line with market forces ¹². Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC ¹³. In the same vein, the Commission found distortions of wage costs in the chemical sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation ¹⁴, as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC ¹⁵.

• (73) Like in previous investigations concerning the chemical sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the complaint, and in the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations ¹⁶ (‘Report’), which relies on publicly available sources. That examination covered not only the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product concerned. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC.

• (74) The complainant, referring to its own market intelligence, to the Report, to previous Commission’s trade defence investigations and to additional publicly available information sources ¹⁷, alleged that significant distortions exist in China which influence the domestic price of the product concerned.

• (75) More specifically, the complaint highlighted the following practices affecting the Chinese market of the product concerned:

• (a) the control by the state and the Chinese Communist Party (‘CCP’ or ‘Party’) over the market: the Chinese economic system continues to be based on a ‘socialist market economy’ whereby the state and the CCP hold a leading role in the economic governance of China ¹⁸ and the CCP maintains tight control over all aspects of the economy, not least through CCP cells which exist in both privately and state-owned enterprises ¹⁹; furthermore, all investments by enterprises, whether state-owned or not, are subject to approval by the National Development and Reform Commission (‘NDRC’), which drafts the five-year plans (‘FYP’) and implements competition law in China;

• (b) the FYPs for the overall economy and by sector: a planning system is in place in China, designed to achieve the objectives of the CCP and the state; the FYPs are implemented by all organs of the state and the CCP, and through their implementation the state and the CCP control the conditions of competition in China and encourage resource allocation in strategic sectors so as to create national enterprise champions to dominate domestic and international markets; a coordinated implementation of the FYPs has resulted in the massive build-up of overcapacity in many sectors including the chemical sector;

• (c) distortive practices in raw materials: the price of inputs is exposed to systemic distortions, with direct price-setting for certain inputs ²⁰; China also uses stockpiling as an instrument which allows the state to significantly influence raw material prices; state-owned enterprises (‘SOEs’) also represent a majority in several raw material industries, including manufacturing of raw chemical materials where SOEs represent 52 % of the industry ²¹; the GOC limits investment into a number of businesses related to raw materials, for domestic as well as foreign investments; additionally, the 13th FYP, the effects of which are still seen today, mentioned the role of the state in controlling ownership, supply and distribution of raw materials;

• (d) distortions in the energy market: energy prices are not market-based but controlled by the PRC which is the world’s largest electricity producer ²² with 50 % of its generating capacity state-owned; the GOC regulates prices for electricity as well as natural gas and ensures that energy prices are differentiated for different industries; cheaper energy is provided, among others, to some manufacturers of electrolytic caustic soda which is one of the main inputs for the product concerned ²³;

• (e) distortions in the capital market: the credit system in China is affected by distortions resulting from the pervasive role of the state in capital markets; access to capital is not equally available; rather, it is biased in favour of SOEs and private enterprises with close government ties or in encouraged sectors ²⁴; government organisations seek to direct investment into strategic projects and industries by offering loan interest subsidies and other means of reducing capital costs and banks and other lenders are encouraged to support these policies by providing loans to companies active in such sectors ²⁵; activities performed through the local government financing vehicles also provide evidence of the pervasive role of the state, contributing to the excessive use of debt instruments, the overinvestment in capital intensive industries, and the increasingly inefficient allocation of credit ²⁶; the presence of ‘zombie companies’ (mainly SOEs in sectors plagued by excess capacity) takes up vast resources that could be allocated for more productive purposes ²⁷; in addition, state sector profitability has constantly decreased, whereas investment has peaked in the years after the global crisis and again as of the end of 2015, suggesting that the mechanisms operating in the banking system are not consistent with normal commercial conditions; in the above mentioned aluminium foil investigation, ²⁸ the US Department of Commerce noted that ‘because there has been no fundamental change in the state’s pervasive role in the financial system and the institutional relationships that bind the government and the principal actors in that system, Commerce’s properly determined, as detailed in the Financial System Memo, that the Chinese financial system is distorted’ ²⁹; since production of the product concerned is capital intensive, the availability of cheap capital has contributed significantly to overcapacity in China in the sector;

• (f) distortions in the labour market: China lacks a market-based wage system ³⁰, not least due to the absence of independent trade unions ³¹ and an underdeveloped collective bargaining, as well as in view of the household registration system which discourages or effectively hinders labour force mobility in China; although the current structure is gradually converging with internationally recognised labour standards, the labour market in China is still impacted by distortions of the past;

• (g) land distortions: the state owns all land in China and it pursues specific political goals in the allocation of land rather than free market principles; some official documents favour land allocation to SOEs and authorities are also instructed to consider industrial policy when setting the price of industrial land; moreover, even in case of bidding for land-use rights, it is common practice that only a number of bidders are allowed to participate, instead of accepting all parties that registered to enter a bid; in addition, in a 2014 State Council notice, China acknowledged that its preferential land-pricing policies may violate international legal obligations, particularly under WTO rules; the notice emphasised the need to align to international rules and to abolish policies that are inconsistent with these obligations, such as ‘reducing, waiving, or deferring the levy of administrative and institutional fees and government funds on enterprises, or transferring land parcels to enterprises at discounted prices or zero land price in violation of applicable provisions’;

• (h) recent distortive practices affecting the price of the product concerned: the chemicals industry represents a priority sector both in the 13th and 14th FYPs in China; one of the effects of the 13th FYP was overcapacity in the production of caustic soda, a major input for the product concerned, as well as overcapacity in the market of the product concerned itself; based on the complainant’s business intelligence three Chinese producers of the product concerned were expected to increase their capacity in 2024 – Jiaxing Zhonghua, Jiangxi Brother and Thrive; Jiaxing Zhonghua, the largest producer, would boost capacity by 2,5 kT (25 % increase); Jiangxi Brother, the second largest producer, planned to add 3 kT (doubling its capacity) and Thrive would expand by 1,5 kT, (375 % increase from its previous capacity of 0,4 kT); ethylvanillin production capacity is set to grow in the next five years, with Jiaxing Zhonghua to add 2,5 kT ³² and Jiangxi Brother to increase capacity by 1,3 kT (57 % increase); furthermore, China’s demand for synthetic vanillin as a percentage of domestic supply has decreased from 16 % in 2019 to 13 % in 2023, with a projected ratio of 11 % by 2028, indicating growing overcapacity; from 2019 to 2028, ethylvanillin overcapacity in China is likely to follow a similar trend – the demand as a percentage of supply decreased from 18 % in 2019 to 14 % in 2023, with a projected ratio of 12 % in 2028; as a consequence, the Chinese market cannot absorb the volume of production, and producers of the product concerned have to find markets in third countries which in turn drives the dumping on the EU market.

• (76) Furthermore, the complaint emphasised the systematic nature of the distortions where the state interventionist policies exert a decisive influence on the allocation of resources and their prices, leading to lower costs of raw materials and production and ultimately lowering the prices of finished products, such as the product concerned.

• (77) In conclusion, the complaint took the position that prices or costs, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation. On that basis, according to the complaint, it is not appropriate to use domestic prices and costs to establish normal value in this case.

• (78) The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product concerned.

• (79) The sector of the product concerned is mainly served by private companies, such as Jiangxi Brother ³³, Kunshan Asia Aroma ³⁴ (‘Asia Aroma’) or Thrive ³⁵, and by private companies with some minority state-ownership such as Jiaxing Zhonghua ³⁶, but also, to some extent, by SOEs like Sinopec Group ³⁷ and Sinochem Group ³⁸, both central enterprises controlled by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), supplying Mono Ethylene Glycol, an input used to produce glyoxylic acid ³⁹, which is in turn used for the production of vanillin.

• (80) Moreover, the investigation found that the national industry association representing the producers of chemical and petrochemical products, such as the product concerned, the China Petroleum and Chemical Industry Federation (‘CPCIF’), established a special committee on high-end specialty chemicals ⁴⁰ like vanillin. The CPCIF adheres to the overall leadership of the CCP, carries out Party activities, and provides necessary conditions for the activities of Party organisations ⁴¹. Moreover, the ‘registration and management authority of the Association is the Ministry of Civil Affairs’ ⁴² and the conditions to be eligible as a CPCIF representative include to ‘adhere to the leadership of the CCP, support socialism with Chinese characteristics, resolutely implement the Party’s line, principles, and policies, and possess good political qualities’ ⁴³.

• (81) Similar provisions are found also in the Articles of Association of China Food Additives and Ingredients Association (‘CFAA’) ⁴⁴. The Party Branch of CFAA ⁴⁵ is further set to ‘continuously enhance research capabilities, […] strengthen the party building work of industry associations and fully implement the general requirements for Party building in the new era’ ⁴⁶ . CFAA has also set up a special committee on food flavors and fragrances covering vanillin ⁴⁷.

• (82) The investigation confirmed that Sinopec Group and Sinochem Group are both members of CPCIF ⁴⁸.

• (83) Furthermore, at provincial level, the Jiangxi Food Additives and Ingredients Association explained on its website that the Association ‘must be under the leadership of the Party, take socialist values as the leading role’ ⁴⁹. The investigation confirmed that Jiangxi Brother, which is located in Jiangxi, is a member of the association ⁵⁰.

• (84) Both public and privately owned enterprises in the chemical sector are subject to policy supervision and guidance. The latest Chinese policy documents concerning the chemical sector confirm the continued importance which GOC attributes to the sector, including the intention to intervene in the sector in order to shape it in line with the government policies.

• (85) This is exemplified by the 14th FYP on Economic and Social Development and 2035 Perspectives (‘14th FYP’), according to which the GOC intends to ‘[t]ransform and upgrade traditional industries, promote the optimization of the layout and structural adjustment of raw material industries [and] accelerate the transformation and upgrading of key industries such as chemicals and papermaking’ ⁵¹.

• (86) Also, the 14th FYP on Developing the Raw Materials Industry requires that ‘[k]ey industries such as petrochemicals, chemical industry and steel shall focus on the plan’s goals and tasks’ ⁵².

• (87) Additionally, the Guiding Opinion on Promoting the High-Quality Development of the Petrochemical and Chemical Industries during the 14th FYP (‘the Guiding Opinion’) stipulates that the GOC will ‘[p]romote industrial structure adjustment: strengthen specific measures and scientifically regulate the scale of the industry’ and ‘[v]igorously develop new chemical materials and fine chemicals’ ⁵³.

• (88) As to the GOC being in a position to interfere with prices and costs through state presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, due to the lack of cooperation by the exporting producers, it was impossible to systematically establish existence of personal connections between producers of the product concerned and the CCP. However, given that the product concerned represents a subsector of the chemical sector, information established in the recent investigations concerning the chemical sector, as indicated in recital (72), is relevant also to the product concerned.

• (89) Moreover, the investigation found that Jiaxing Zhonghua’s CCP members are to ‘earnestly study and implement the spirit of the 19th National Congress of the Communist Party of China, to actively participate in all aspects of the company’s production and operation’ ⁵⁴.

• (90) In addition, the chairman and general manager of Thrive was awarded the title of ‘Chongqing Outstanding Private Enterpreneur’ by the Chongqing Municipal Committee of the Communist Party of China and the Chongqing Municipal People’s Government in recognition for his ‘adher[ing] to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era’ ⁵⁵.

• (91) Furthermore, as regards input suppliers, Sinochem Group’s chairman of the board of directors serves as the secretary of the Party committee and several members of the board of directors serve as deputy secretaries of the Party committee ⁵⁶. Also, Sinochem Group presents itself as a company that ‘adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, effectively strengthens the Party's overall leadership over the enterprise, deepens Party building, [and] gives full play to the role of Party organizations at all levels’ ⁵⁷.

• (92) Similarly, Sinopec Group’s chairman of the board of directors is the secretary of the Party committee and several members of the board serve as deputy secretaries of the Party committee ⁵⁸. Sinopec Group stated it intends to ‘focus on the company’s new mission and new tasks on the new journey, carry forward the party’s self-revolutionary spirit, strengthen the party’s leadership and party building in an all-round and integrated manner, and systematically promote comprehensive and strict party governance, so as to provide a strong guarantee for writing a new chapter of China’s modern petrochemical industry’ ⁵⁹.

• (93) Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the sector of the product concerned. The investigation identified documents showing that the industry benefits from governmental guidance and intervention into the chemical sector, given that the product concerned represents one of its subsectors.

• (94) The chemical industry keeps being regarded as a key industry by the GOC ⁶⁰. This is confirmed in the numerous plans, directives and other documents focused on chemicals, which are issued at national, regional, and municipal level. Under the 14th FYP, the GOC earmarked the chemical industry for optimisation and upgrade ⁶¹.

• (95) Similarly, the 14th FYP on Developing the Raw Materials Industry stipulates that the GOC will ‘[p]romote standardized cluster development. Formulate the conditions for the identification of chemical parks, guide local governments to identify a number of chemical parks, and guide the clustering and standardized development of chemical enterprises. […] Promote the construction of national new industrialization industry demonstration bases in the field of raw materials, promote the transformation and upgrading of industrial agglomerations into clusters. […] [C]reate a number of chemical, petrochemical […] and new materials industry clusters. Optimize the organizational structure: Make leading enterprises bigger and stronger. […] [S]upport enterprises to accelerate cross-regional and cross-ownership mergers and reorganizations, increase industrial concentration, and conduct international operations. In the chemical, petrochemical, steel, non-ferrous metals, building materials and other industries’ sectors, cultivate a group of leading enterprises in the industrial chain with ecological dominance and core competitiveness’ ⁶².

• (96) Furthermore, at provincial level, the chemical sector is also singled out as a sector to be promoted, like for instance in Jiaxing Municipality, where Jiaxing Zhonghua is located. The Jiaxing Municipal Bureau of Economy and Information Technology’s Implementation Opinion on Chemical and New Material Industry Cluster Cultivation and Development requires that ‘[b]y 2025, the proportion of high-end chemical new materials products in our city will be greatly increased, advanced chemical new materials and high-end fine chemicals will develop rapidly […] and overcapacity will be effectively resolved. […] [The Municipality] will strive to exceed RMB 300 billion in total output value of chemical new materials enterprises above designated size by 2025, ensure that there are 3 enterprises with an output value of RMB 10 billion, 5 enterprises with an output value of RMB 5 billion or more, and 20 enterprises with an output value of RMB 1 billion or more’. To this end, the Jiaxing Municipality intends to ‘[i]mplement relevant national and provincial support policies, [and] [i]ncrease support for the technological transformation of the new chemical materials industry.’ ⁶³

• (97) More specifically, the food additive subsector is also singled out at provincial level like in Chongqing, where Jiangxi Brother is located. The Chongqing Municipality People’s Government’s 14th FYP on the High Quality Development of the Manufacturing Industry requires to ‘actively introduce and cultivate food additive production enterprises’ ⁶⁴.

• (98) The product concerned is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (72). Those distortions affect the sector both directly (when producing the product concerned or the main inputs), as well as indirectly (when having access to inputs from companies subject to the same labour system in the PRC) ⁶⁵.

• (99) Moreover, no evidence was submitted by interested parties 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.

• (100) Finally, the Commission recalls that in order to produce the product concerned, a number of inputs is 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.

• (101) 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 Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC 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.

• (102) In sum, the evidence available showed that prices or costs of the product concerned, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation, as shown by the actual or potential impact of one or more of the relevant elements listed therein.

3.2.2.   Arguments raised by interested parties

• (103) Upon initiation, Jiangxi Brother requested the Commission to reject the Complainant’s claim on the alleged significant distortions and urged the Commission to accept the domestic prices and costs reported by the cooperating Chinese exporters. However, it did not substantiate the claim which was therefore rejected.

• (104) Frey & Lau also contested the application of Article 2(6a) of the basic Regulation. It submitted that no distortion with the meaning of Article 2(6a) of the basic Regulation could be present, as the fluctuating market price in recent years in combination with the existing overcapacities in PRC would show the absence of state intervention and demonstrate the existence of undistorted prices of the product under investigation, as otherwise, prices would have been kept constant or low. The Commission considered that stable prices are not a necessary consequence of a distortion within the meaning of Article 2(6a) of the basic Regulation. Equally, fluctuating prices do not demonstrate a lack of such distortions. Therefore, the arguments brought by Frey & Lau did not demonstrate the absence of a price distortion or state intervention. The claim was thus rejected.

• (105) In response to the Commission’s First Note, Thrive argued that a comparison of domestic prices for factors of production for synthetic vanillin and ethylvanillin – particularly energy, key raw materials, and labour – with prices in the representative countries examined by the Commission does not indicate the presence of market distortions in China. The Commission noted that Thrive neither claimed that Article 2(6a) should therefore not be applied, nor that it substantiated why this price analysis would entail that Article 2(6a) cannot be applied. In any event, the Commission considered that the price analysis provided by Thrive was incomplete, as it consisted of only a limited number of factors of production.

• (106) Upon definitive disclosure, Thrive submitted, on 8 April 2025, an additional set of comments pointing out the following alleged inaccuracies or misunderstandings in the complaint or in the Commission’s argumentation concerning the existence of significant distortions: (i) the company’s approved production capacity does not correspond to the levels indicated by the complainant (see recital (75)); (ii) Jiaxing Zhonghua has not set up a new production site, as indicated by the complainant, but new company; moreover, the production capacities of Chinese producers indicated by the complainant are incorrect (see recital (75)); (iii) the development of the Chinese market, characterised by the market’s inability to absorb the production volumes of the product under investigation, as described by the complainant (see recital (75)), does not correspond to Thrive’s perception of the market development; (iv) the fact that Thrive’s general manager was awarded the title of Chongqing Outstanding Private Entrepreneur (see recital (90)) was due to Thrive’s contribution to tax income and the company’s social responsibility and the award has nothing to do with the general manager’s political stance; in any event, Thrive’s general manager is not a CCP member; (v) Jiangxi Brother is not located in Chongqing and therefore not subject to Chongqing’s 14th FYP on the High Quality Development of the Manufacturing Industry (see recital (97)); (vi) as to the food additive subsector being singled out at provincial level for government support (see recital (97)), while ethyl vanillin and vanillin are considered food additives, synthetic aroma chemical industry is not mentioned in the FYP quoted by the Commission and, consequently, Thrive does not enjoy governmental support or special treatment through policies.

• (107) The Commission took note of Thrive’s comments and pointed out that: (i) irrespective of the accuracy of the production capacity indicated by the complainant, the production capacity levels provided by Thrive confirm the complainant’s argument concerning the sharp increase of production capacity in China of the product concerned, the production capacity indicated by Thrive being even higher than the capacity referred to by the complainant; (ii) Thrive merely claimed that the production capacities of other Chinese producers, indicated by the complainant, are incorrect, without providing any data which would actually call into question the complainant’s submission; (iii) similarly, Thrive’s remark concerning the market dynamics of the product concerned was not substantiated by any additional data or explanation and the Commission therefore did not see any reason to doubt the information provided by the complainant; (iv) the Commission did not claim that Thrive’s general manager would be CCP member, nor did it make any statement concerning the manager’s political persuasions; the Commission merely observed that the title had been awarded by the Chongqing CCP Municipal Committee and the Chongqing Municipal People's Government and that the manager’s adhering to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era was considered relevant by the respective authorities when awarding the title. In addition, the investigation showed that Thrive’s general manager promotes CCP building work within the company and ‘trusts that if Thrive can combine and integrate the CCP’s concepts and practices, Thrive will also be able to reach a very good development and will gain global competitiveness’ ⁶⁶; (v) as to the reference to Chongqing as municipality where Jiangxi Brother is located, this is a clerical error on the Commission’s part, recital (97) should have referred to Thrive, located in Chongqing; while it can be therefore accepted that Jiangxi Brother is not subject to Chongqing’s industrial policies referred to in recital (97), it remains subject to the governmental interference of the Jiangxi authorities (see recital (83)), as well as to the nation-wide distortions described in recitals (83)-(102); correspondingly, the Chongqing policies are relevant for local vanillin producers, such as Thrive; (vi) irrespective of whether Thrive specifically benefits from the government mandate to cultivate food additive production enterprises in Chongqing due to the policy support being directed to companies producing food additive but not to producers of synthetic aromas, the Commission explained above (see in particular Sections 2.1 to 2.4) why all types of vanillin constitute like product; therefore, the reference in recital (97) to the Chongqing’s 14th FYP on the High Quality Development of the Manufacturing Industry remains fully relevant for the purpose of identifying government interventions within the meaning of point (b) of Article 2(6a) of the basic Regulation. Consequently, Thrive’s comments could not alter the Commission’s determinations concerning the existence of significant distortions in the sector of the product concerned.

3.2.3.   Conclusion

• (108) In view of the above, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as described in the following section.

3.3.   Representative country

3.3.1.   General remarks

• (109) 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 ⁶⁷,

• — 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.

• (110) As explained in recitals (64) to (67), the Commission issued two notes for the file on the sources for the determination of the normal value: the First Note on 21 October 2024 and the Second Note on 3 January 2025. 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. In the Second Note, the Commission informed interested parties of its intention to consider Brazil 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.

3.3.2.   A level of economic development similar to the PRC