Commission Implementing Regulation (EU) 2025/1723 of 6 August 2025 imposing a provisional anti-dumping duty on imports of certain prepared or preserved sweetcorn in kernels, originating in the People’s Republic of China

COMMISSION IMPLEMENTING REGULATION (EU) 2025/1723 of 6 August 2025 imposing a provisional anti-dumping duty on imports of certain prepared or preserved sweetcorn in kernels, originating in the People’s Republic of China

THE EUROPEAN COMMISSION,

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

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

After consulting the Member States,

Whereas:

(1) On 9 December 2024, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of sweetcorn originating in the People’s Republic of China (‘the country concerned’ or ‘the PRC’ or China) 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 25 October 2024 by the Association Européenne des Transformateurs de Maïs Doux (AETMD) (‘the complainant’). The complaint was made on behalf of the Union industry of certain prepared or preserved sweetcorn in kernels in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2025/309 of 14 February 2025 (‘the registration Regulation’) (3).

(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, other known Union producers, the known exporting producers, and the Chinese authorities, and known importers and 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. Following the initiation, a hearing took place with the European Federation of the Trade in Dried Fruit, Edible Nuts, processed fruit & vegetables and processed fishery products (‘FRUCOM’) and its national member associations Waren-Verein der Hamburger Börse e.V. (‘Waren-Verein’) and Nederlandse Vereniging voor de Handel in Gedroogde Zuidvruchten, Specerijen en Aanverwante Artikelen (‘NZV’), as well as representatives of several importing members.

(6) The Commission received comments on initiation from the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (‘CFNA’) and from Waren-Verein.

(7) The CFNA criticised that the investigation period of the complaint was not updated close to the submission date. The association argued that it may present a different injury picture as when compared to the investigation period of the investigation, due to significant changes in the EU market as from the second quarter of 2024 and until the end of 2024. The CFNA further considered that Thailand and the PRC are the only major producers and exporters of sweetcorn and that Thai market shares could be taken over by imports from the PRC, if imports from Thailand are restricted by anti-dumping measures. Additionally, the CFNA argued that the increase in imports from the PRC in 2022 was possibly caused by unforeseen developments, such as (1) natural disasters and floods in Thailand that reduced the output of corn and sufficient supply; (2) a bad harvest in Europe due to dry climate conditions, in particular in France; and (3) the war in Ukraine that might have increased energy costs of sweetcorn producers and reduced sweetcorn supply. The CFNA further considered that in 2022, the pattern in export sales from the PRC was changed due to a large order from Lidl. It considered that the bad harvest in Europe may have affected the sweetcorn supply in Europe and purchasers such as Lidl might have stockpiled to avoid shortage of supply.

(8) The Commission reminds the CFNA that the investigation period was defined in line with Article 6 of the basic Regulation, covering a period of no less than six months immediately prior the initiation of proceedings. Therefore, the claim was rejected.

(9) With regards to the claim that the increased market share of imports from the PRC was due to the imposition of anti-dumping measures on imports from Thailand, the Commission reminds CFNA that these measures have been in place since 2009. Therefore, the claim was rejected.

(10) The CFNA did not provide any supporting evidence related to the claim that the change in exports was due only to a major order of the retailer Lidl. The claim was therefore rejected.

(11) The CFNA also argued that the complaint did not demonstrate the material injury of the Union industry and stated that the increased imports from the PRC did not have any negative impact on the development of the complainant in terms of production, capacity, capacity utilisation, stocks, sales prices.

(12) According to the Commission’s assessment of the information provided in the complaint, there was sufficient evidence pointing to material injury that justified the initiation of the investigation. The claim was therefore rejected.

(13) The CFNA further claimed that imports from the PRC are not the sole cause of the injury to the complainant and referred to the factors described in recital 6. It recalled the anti-dumping investigation concerning soy protein imports originating in the PRC (4), where the Commission found that the coincidence of a price increase with the poor financial performance of the Union industry indicated the volatility of the raw material market and was a major cause of injury suffered by the Union industry, which broke the causal link between the Chinese imports and material injury suffered by the Union industry. The CFNA claimed a similar situation for this investigation.

(14) In the Commission’s view, none of the other possible explanations mentioned above disprove the conclusion that there was sufficient evidence in the complaint concerning the injury caused by dumped imports to the Union industry which justified the initiation of an anti-dumping proceeding.

(15) Waren-Verein requested to extend the period considered to assess the effect of the poor crops for 2020. It requested to consider also other one-off effects, such as freight and currency conditions that were favorable for purchase decisions.

(16) The complaint analysed the positive causal link between the dumped imports from the PRC and the material injury of the Union industry by analysing the trends of import volumes, the Union sales prices during the period considered, and the main injury indicators over the period considered. A positive link could be demonstrated, while showing that no other factors attenuated the causal link. At this stage, the Commission considered the evidence present in the complaint concerning causality as reasonable and refers to section 5 below on causation. Therefore, this claim was rejected.

(17) Finally, the CFNA requested the Commission to apply the lesser duty rule pursuant to Article 7(2) of the basic Regulation. It argued that the complaint failed to present specific evidence on the existence of raw material distortions.

(18) The complainant provided credible and relevant evidence that all the legal requirements to waive the lesser duty rule were met at initiation, including evidence on distortions on the steel market in the PRC that could affect the price of steel cans. At this stage, the Commission considered the evidence present in the complaint concerning raw material distortions as reasonable. Therefore, this claim was rejected.

(19) Waren-Verein criticised the date chosen for the initiation of the proceeding, which restricted the possibility of interested parties to participate in the investigation.

(20) The Commission services have no impact on the Union industry’s decision on when they lodge a complaint. Once a complaint is lodged, the Commission is legally obliged to take a decision on the case and inform the parties concerned within 45 days, in accordance with Article 5(9) of the basic Regulation, either by the publication of a notice in the Official Journal in case of initiation of an investigation or by informing the Union industry in case of a rejection of the complaint.

(21) With regards to the selection of the sample of exporting producers, Waren-Verein requested to select exporters based on a representative basis.

(22) The Commission highlighted that in accordance with Article 17(1) of the basic Regulation, the selection of the sample should be statistically valid on the basis of information available at the time of the selection or be based on the largest representative volume of production, sales or exports which can reasonably be investigated within the time available.

(23) Waren-Verein requested to limit the selection of the product covered by the investigation to TARIC code 2005 80 00 , while TARIC code 2001 90 30 10 should not be included.

(24) The Commission noted that no further evidence was provided to justify the request of product exclusion. The claim was therefore rejected.

(25) Waren-Verein argued the negative impact of freight and exchange rates on product prices and requested to consider them during the calculation of the normal value. Moreover, Waren-Verein questioned the comparability of prices of products falling within the product description but varying in size, end-consumers, packaging or delivery conditions.

(26) With regards to the questions raised on price comparability, the Commission reassured Waren-Verein that, in accordance with Article 2(10) of the basic Regulation, the comparison between export prices and the normal value is made at the same level of trade and in respect of sales made at, as closely as possible, the same time and with due account taken of other differences which affect price comparability. If necessary, adjustments can be made to account for differences on physical characteristics, transport and freight conditions, packing, currency conversion and other factors.

(27) Waren-Verein requested to consider the interests of consumers and traders during the investigation. The association claimed that sweetcorn prices will likely increase to the disadvantage of consumers, in case anti-dumping duties will be imposed. Considering future poor crops and other unforeseen events in the EU affecting imports, the association considered that no measures should be imposed. It also claimed that EU sweetcorn producers are economically strong enough and do not need to be protected by anti-dumping measures.

(28) The Commission reminds Waren-Verein that the assessment of the Union interest is carried out as part of the investigation and not at complaint stage. The views of all parties are therefore assessed in section 7 of this regulation.

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

(30) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the estimated volume of production and sales of the like product in the EU during the investigation period. This sample consisted of two Union producers. The sampled Union producers accounted for more than [29 – 38] % of the estimated total volume of production and more than [39 – 48] % of the estimated total sales in the Union. The Commission invited interested parties to comment on the provisional sample. No comments on the sample were received. The sample of the Union industry was therefore confirmed. Sampling of unrelated importers

(31) 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.

(32) Six unrelated importers provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two unrelated importers on the basis of the largest import volume of the product concerned in the Union. In accordance with Article 17(2) of the basic Regulation, all known importers concerned were consulted on the selection of the sample. One of the sampled importers informed the Commission it no longer wished to cooperate and would not provide a questionnaire reply. The Commission therefore decided to replace this importer with another importer. Interested parties were informed of the change accordingly. No comments were received on the adjusted sample. Sampling of exporting producers

(33) 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 Chinese mission to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(34) Twenty-three companies in the country concerned provided the requested information and agreed to be included in the sample. Two of these companies were related, one of which was not an exporting producer. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample. No comments were received on the selection of the sample and the Commission confirmed the sample.

(35) 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’).

(36) Furthermore, the complainant provided in the complaint sufficient prima facie evidence of raw material distortions in China regarding the product concerned. Therefore, as announced in the Notice of Initiation, the investigation covered those raw material distortions to determine whether to apply the provisions of Article 7(2a) and 7(2b) of the basic Regulation with regard to China. For this reason, the Commission sent additional questionnaires in this regard to the GOC.

(37) The Commission sent questionnaires to the complainant, Union producers, exporting producers, and the known importers. The same questionnaires were made available online (5) on the day of initiation.

(39) In addition, the Commission verified the macro-questionnaire submitted by the complainant AETMD in Paris, France.

(40) 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 as described at section 3.2.1 below.

(41) A partial application of Article 18 was made to the Sunflower Group for issues relating to information supplied in respect of the calculation of the CIF prices and credit costs relevant to the findings on export prices as described at section 3.3 below.

(42) A partial application of Article 18 was made to the Tongfa Group also for issues relating to information supplied in respect of the calculation of the CIF prices relevant to the findings on export prices as described in section 3.4 below. In addition, Article 18 was also applied to determine labour hours input to the calculation of labour as a factor of production as described at section 3.2.3.1 below.

(43) The investigation of dumping and injury covered the period from 1 October 2023 to 30 September 2024 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2021 to the end of the investigation period (‘the period considered’).

(44) The product under investigation is sweetcorn (Zea mays var. saccharata) in kernels, prepared or preserved by vinegar or acetic acid, not frozen and sweetcorn (Zea mays var. saccharata) in kernels prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006 , currently falling under CN codes ex 2001 90 30 (TARIC code 2001 90 30 10) and ex 2005 80 00 (TARIC code 2005 80 00 10 (‘the product under investigation’).

(45) Sweetcorn is used for human consumption. The product is usually presented in a canned format, but also in glasses, tetra packs or pouches.

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

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

(49) 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.

(50) 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 certain prepared or preserved sweetcorn in kernels (sweetcorn). Fourteen exporting producers submitted the relevant information.

(51) In order to obtain the information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

(52) In point 5.3.2 of the Notice of Initiation the Commission also specified that, in view of the evidence available, it had provisionally selected Türkiye as 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. The Commission further stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

(53) On 12 March 2025, the Commission informed by a note (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of the product concerned. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Colombia, Malaysia, Mexico, Serbia, Thailand and Türkiye as appropriate representative countries.

(54) On 6 June 2025, the Commission informed interested parties by a second note (‘the Second Note’) on the relevant sources it intended to use for the determination of the normal value, with Malaysia as the representative country. It also informed interested parties that it would establish selling, general and administrative costs ('SG&A') and profits based on available information for the Fraser and Neave Holdings BHD, a producer in the representative country.

(55) The Commission concluded that Colombia, Serbia and Türkiye should not be considered as representative countries, notably because of the lack of relevant, publicly available financial data concerning companies producing the product under investigation and/or similar products. Moreover, Thailand does not appear to be an appropriate representative country within the meaning of Article 2(6a)(a), as the prices of imports of fresh sweetcorn in Thailand is affected by distortions, due to their quantity of imports from China.

(56) The Commission did not propose Mexico as representative country due to the absence of import data for fresh sweetcorn, which is the main factor of production representing around 50 % of the total cost of manufacturing.

(57) The Commission noted that Malaysia would provide a suitable benchmark for the most important factors of production (fresh sweetcorn and cans). The Commission noted the availability of a suitable import price for fresh sweetcorn due to the low quantities of imports from the PRC. In respect of cans, although 78 % of quantities were sourced from the PRC, the Commission noted a large difference in prices between cans sourced from the PRC and those from other sources (around 14 CNY per kilo and 28 CNY per kilo respectively). Therefore, in the absence of evidence that the price of cans from other sources was distorted, the Commission proposed to use this price as a benchmark. Imports of cans from other sources were found not to have been influenced by the Chinese prices and the quantities and prices of the rest of imports remained representative. In addition, the information of Fraser and Neave Holdings BHD was particularly suitable as a source of SGA and profit data as the annual report of 2024 was for the investigation period (30 October 2023 to September 2024).

(58) The Commission therefore provisionally decided to choose Malaysia as the most appropriate representative country. The comments made by interested parties concerning the First and Second Note, and in particular relating to the choice of representative country, are discussed below at section 3.2.2.

(59) 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’.

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

(61) 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 appropriate.

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

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

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

(66) Pursuant to this provision, the Commission issued a country report concerning China (‘the Report’) (6), which contains evidence of the existence of substantial government intervention at many levels of the economy, including specific distortions in many key factors of production (such as land, energy, capital, raw materials and labour) as well as selected sectors (such as the steel sector). Interested parties were invited to rebut, comment or supplement the evidence contained in the investigation file at the time of initiation. The Report was placed on the investigation file at initiation.

(67) The complainant argued that prices or costs of the product under investigation, 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 and that, as a result, it is not appropriate to use domestic prices and costs to establish normal value.

(68) To support this position, the complainant referred to the evidence contained in the Report, in particular with regard to distortions in the key sectors of production, such as land, energy, capital, raw materials and labour, as well as key raw materials in the production of preserved sweetcorn such as steel and aluminium. The complainant claimed the existence of significant distortions regarding all points listed in Article 2(6a)(b) of the basic Regulation.

(69) Specifically, the complainant claimed that the GOC exercises control, supervision and guidance over the Chinese preserved sweetcorn industry, which is an integral part of the canned food industry. The complainant listed several policy measures which result in: the Chinese producers adhering to the Chinese Communist Party (‘CCP’) ideology; pursuing an export oriented approach in particular through the Belt and Road Initiative (‘BRI’); in the sector displaying strong consolidation with only a handful market players present; the Chinese producer receiving government support.

(73) The complainant also stated that the distortions in the sector of product under investigation stem from the GOC’s intervention in the upstream sectors, in particular those of raw corn and steel.

(74) Regarding the raw corn industry, the complainant noted that the vast majority of corn exporters are SOEs, which are, according to the complainant, vehicles of the GOC to achieve its policy goals and benefitting from related government support.

(75) Regarding the steel sector, the complainant noted that most of the steel producers in China are SOEs, and it referred to previous investigations in which the Commission established the existence of distortions within the sector (20).

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

(77) The Chinese economic system is based on the concept of a ‘socialist market economy’. That concept is enshrined in the Chinese Constitution and determines the economic governance of China. The core principle is the ‘socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people’ (21).

(78) The state-owned economy is the ‘leading force in the national economy’ and the state has the mandate to ensure its ‘consolidation and growth’ (22). Consequently, the overall setup of the Chinese economy not only allows for substantial government interventions into the economy, but such interventions are expressly mandated. The notion of supremacy of public ownership over the private one permeates the entire legal system and is emphasized as a general principle in all central pieces of legislation.

(79) The Chinese property law is a prime example: it refers to the primary stage of socialism and entrusts the state with upholding the basic economic system under which the public ownership plays a dominant role. Other forms of ownership are tolerated, with the law permitting them to develop side by side with the state ownership (23).

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

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

(82) Following the already existing first sentence of the provision: ‘[t]he socialist system is the basic system of the People’s Republic of China’ a new second sentence was inserted which reads: ‘[t]he defining feature of socialism with Chinese characteristics is the leadership of the Communist Party of China’ (24). This illustrates the unquestioned and ever-growing control of the CCP over the economic system of China.

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

(84) The Chinese state engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the CCP rather than reflecting the prevailing economic conditions in a free market (25). The interventionist economic tools deployed by the Chinese authorities are manifold, including the system of industrial planning, the financial system, as well as the level of the regulatory environment.

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

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

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

(88) The economic operators, private and state-owned alike, must effectively adjust their business activities according to the realities imposed by the planning system. This is not only because of the binding nature of the plans, but also because the relevant Chinese authorities at all levels of government adhere to the system of plans and use their vested powers accordingly, thereby inducing the economic operators to comply with the priorities set out in the plans (26).

(89) Second, on the level of allocation of financial resources, the financial system of China is dominated by the state-owned commercial and policy banks. Those banks, when setting up and implementing their lending policy need to align themselves with the government’s industrial policy objectives rather than primarily assessing the economic merits of a given project (27).

(90) The same applies to the other components of the Chinese financial system, such as the stock markets, bond markets, private equity markets etc. Also, these parts of the financial sector are institutionally and operationally set up in a manner not geared towards maximizing the efficient functioning of the financial markets but towards ensuring control and allowing intervention by the state and the CCP (28).

(91) Third, on the level of regulatory environment, the interventions by the state into the economy take a number of forms. For instance, the public procurement rules are regularly used in pursuit of policy goals other than economic efficiency, thereby undermining market-based principles in the area. The applicable legislation specifically provides that public procurement shall be conducted in order to facilitate the achievement of goals designed by state policies. However, the nature of these goals remains undefined, thereby leaving broad margin of appreciation to the decision-making bodies (29).

(92) Similarly, in the area of investment, the GOC maintains significant control and influence over destination and magnitude of both state and private investment. Investment screening as well as various incentives, restrictions, and prohibitions related to investment are used by authorities as an important tool for supporting industrial policy goals, such as maintaining state control over key sectors or bolstering domestic industry (30).

(93) In sum, the Chinese economic model is based on certain basic axioms, which provide for and encourage manifold government interventions. Such substantial government interventions are at odds with the free play of market forces, resulting in distorting the effective allocation of resources in line with market principles (31).

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

(95) Sweetcorn is mainly produced by private companies, such as Sunflower Food Industry Xinfeng Co. Ltd. (32), Zhangzhou Tongfa Food Industry Co. Ltd. (33) or Runfeng Food Co. Ltd. (34). The canned food sector is also served by companies partially state-owned like Hangzhou Wahaha Group (35) featuring 46 % state ownership (36).

(96) However, CCP interventions into operational decision making have become the norm not only in SOEs, but also in private companies (37), with the CCP claiming leadership over virtually every aspect of the country’s economy. Indeed, the state’s influence by means of CCP structures within companies effectively results in economic operators being under the government’s control and policy supervision, given how far the state and Party structures have grown together in China.

(97) Moreover, the sweetcorn sector is subject to several government policies, such as the 2022 key policies announced by the Ministry of Finance and the Ministry of Agriculture and Rural Affairs: ‘[i]ntegrated development of agricultural industry. Coordinate the layout and construction of a number of national modern agricultural industrial parks, advantageous and characteristic industrial clusters, and agricultural industrial strong municipalities. Focusing on ensuring national food security and effective supply of important agricultural products, focusing on rice, wheat, corn, […] build a modern rural industrial system based on strong industrial towns, industrial parks as the engine, and industrial clusters as the backbone, provincial, county and township layouts, and coordinated promotion of points, lines, and areas, so as to improve the quality and efficiency of industrial development as a whole’ (38).

(98) Similarly, the 14th FYP on Promoting the Modernization of Agriculture and Rural Areas sets the following objectives: ‘[n]ational food security industry belt construction: [b]ased on the production and supply of rice, wheat, corn, soybeans, etc., coordinate the layout of capacity building in production, processing, storage, and circulation, and build food safety industrial belts […]’ (39).

(99) Government control and policy supervision can be also observed at the level of the relevant industry associations (40).

(100) For instance, the canned food sector is covered by the China National Light Industry Council (‘CNLIC’) (41). Article 2 of CNLIC’s Articles of Association (42) describes the Council’s purpose as being ‘to thoroughly study and implement the spirit of General Secretary Xi Jinping’s series of important speeches.’ Furthermore, Article 3 mandates that ‘[t]he Council adheres to the overall leadership of the Communist Party of China, and in accordance with the provisions of the Constitution of the Communist Party of China, establishes the organization of the Communist Party of China, carries out the activities of the Party, and provides the necessary conditions for the activities of the Party organization’ (43).

(101) The CNLIC provides guidance to the sector (44), as well as to CCFIA (45), in particular as regards Party building activities and policy making. In 2022 the Council recommended that the CCFIA ‘should adhere to the guidance of Party building, guide the industry to unswervingly listen to the Party, and unswervingly follow the Party’ and that it ‘should encourage enterprises to develop new varieties on the basis […] of canned vegetable’ and ‘develop, strengthen and support enterprises, develop canning industry clusters’ (46) .

(102) Accordingly, according to Article 4 of CCFIA’s Articles of Association (47), the Association ‘adheres to the overall leadership of the [CCP], establishes the organization of the [CCP] in accordance with the provisions of the [CCP] Constitution […], carries out Party activities, and provides necessary conditions for the activities of Party organizations. The registration and management authority of this Association is the Ministry of Civil Affairs of the People’s Republic of China, and the Party building leading authority is the Party Committee of the State-owned Assets Supervision and Administration Commission of the State Council’. Moreover, the Association ‘accepts the business guidance, supervision and management’ by the Ministry of Civil Affairs and by the Party Committee of State-owned Assets Supervision and Administration Commission (48). Additionally, Article 24 of CCFIA’s Articles of Association requires the chairman, vice chairman and secretary general of the association to ‘[a]dhere to the Party’s line, principles, policies and have good political qualities’ (49). Sunflower Food Industry Xinfeng Co. Ltd. (50), Zhangzhou Tongfa Food Industry Co. Ltd. and Runfeng Food Co. Ltd. (51) are all members of CCFIA (52).

(103) Consequently, even 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.

(104) 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.

(105) 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 (53)) and the company shall provide the necessary conditions for the activities of the Party organisation.

(106) 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 (54), including exercising pressure on private companies to put ‘patriotism’ first and to follow Party discipline (55).

(107) Already in 2018, it was reported that Party cells existed in 73 % of some 2,57 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies (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.

(108) 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.

(109) 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).

(110) While it has not been possible to establish systematic overlaps between managerial positions and CCP membership/functions among producers of the product concerned, the investigation confirmed direct CCP interference in their management. For instance, the Party Working Committee and the General Party Branch of the Chamber of Commerce of Pancheng Street District located in Nanjing Jiangbei area (59), where a subsidiary of Runfeng Food Co. is located, describes its work as ‘[c]losely focusing on the main line of Party building leading the work of the Chamber of Commerce, […] taking multiple measures to promote the deep integration of Party building and the work of the Chamber of Commerce. […] In the process of serving enterprises, the General Party Branch of the Chamber of Commerce regularly carries out “service enterprises, face-to-face” symposiums and visits to help enterprises become bigger and stronger, and in the process of serving enterprises, it has successfully introduced many projects […] and promoted Jiangsu Runfeng Food Co., Ltd. to invest in the construction of a comprehensive demonstration park agricultural product sorting centre’ (60) .

(111) Furthermore, the Law on Promoting the Private Sector Economy (‘Private Economy Law’) mandates that ‘[p]rivate economic organizations and their operators shall support the [CCP] leadership […], adhere to the socialist system with Chinese characteristics, and actively participate in the construction of a socialist modern power’ (61).

(112) 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 (62). Thus, the state presence in firms, in the sweetcorn and other sectors (such as the financial and input sectors) allows the GOC to interfere with respect to prices and costs.

(113) 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.

(114) 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 (63).

(115) Furthermore, the Private Economy Law sets out that ‘[t]he state shall strengthen the construction of a team of operators of private economic organizations, strengthen ideological and political guidance, and give play to their important role in economic and social development; […] guide operators of private economic organizations to practice the core socialist values, be patriotic and dedicated, […] and firmly become builders of socialism with Chinese characteristics and promoters of Chinese-style modernization’ and also that ‘[p]rivate economic organizations and their operators shall […] accept government and social supervision when engaging in production and operation activities’ (64).

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

(117) The 2022 key policies of the Ministry of Finance and the Ministry of Agriculture and rural affairs mentioned above (see recital 97) contain also the following provision influencing the functioning of the sector: ‘[t]he state will continue to implement policies such as subsidies for corn and soybean producers, subsidies for rice, and incentives for large grain-producing counties, so as to consolidate the effectiveness of supply-side structural reform in agriculture and ensure national food security’. Moreover, the document provides for ‘[r]ewards for major seed production counties. Expand the scope of support for major seed production counties of rice, wheat, corn […], and promote the transformation and upgrading of the seed industry’ (65).

(118) The 14th FYP on Promoting the Modernization of Agriculture and Rural Areas (66) aims to ‘[i]mprove grain production support policies. Stabilize grain farmers’ subsidies, improve the minimum purchase price policy for rice and wheat, and the subsidy policy for corn and soybean producers. Improve the compensation mechanism for the interests of major grain-producing areas and improve the support policy system for major grain-producing counties’ (67). According to the 14th FYP on Developing the Planting Sector at National Level (68), ‘[d]uring the 14th [FYP] period, we will explore potential expansion, increase production capacity, optimize structure, promote diversified development, and improve supply guarantee capabilities’ (69).

(119) Furthermore, ‘in order to implement the Party’s and Government’s decisions and guidelines (70)’, the CCFIA issued the 14th FYP for the Development of China’s Canned Food Industry (71) setting quantitative targets such as ‘build three demonstration bases for high-quality raw materials for canned food, create five innovation demonstration units, cultivate one new national canned food industry cluster, cultivate ten influential brands with high reputation’, as well as qualitative targets like ‘actively develop canned food varities such as vegetables [and] guide agricultural areas […] to develop green and high-quality crops and breeds […] and create corresponding industry clusters’ (72).

(120) At the provincial level, Jiangxi issued the 14th FYP on Developing a High Quality Manufacturing Industry seeking to ‘further extend and expand the food industry chain, increase product added value [so that] [b]y 2025, the scale of the province’s food processing industry will reach RMB 850 billion yuan. […] In the canned fruit and vegetable sector, [we shall] build vegetable and fruit processing bases […] and expand and strengthen the fruit and vegetable processing cluster in southeastern Fujian’ (73).

(121) Sunflower Food Industry Xinfeng Co. Ltd is located in Jiangxi and Zhangzhou Tongfa Food Industry Co. Ltd is located in Fujian.

(122) Moreover, Heilongjiang, in its 14th FYP on Economic and Social Development and 2035 Perspectives, aims at ‘[m]oderately expanding high-yield food crops such as corn, […] and building a national corn and soybean high-quality grain production base’ (74).

(123) More specifically for the sector of the product concerned, Heilongjiang issued a Development Plan for the Corn Processing Industry (2021-2025) (75), according to which the province plans to ‘cultivate and create a group of leading and backbone enterprises led by [RMB] “10 billion-level” enterprises, so as to provide the main support for building a modern corn processing industry system’ and to ‘[p]romote the transformation and upgrading of enterprises to become better and stronger, […] [p]romote corn processing enterprises to accelerate technological transformation, adopt advanced and applicable technologies and processes, eliminate old equipment, introduce and purchase advanced equipment and production lines, and enhance core competitiveness.’ (76) .

(124) Furthermore, in 2024, Shandong launched a ‘pilot project’ to promote, upgrade and develop the corn industry (77), providing important tax support for research and development.

(125) Similarly, Jilin issued specific preferential policies benefitting the industry of the product concerned. According to a report released on its website, the Jilin Provincial Taxation Bureau ‘formulates and adjusts the list of policy benefits as well as the list of topics requiring quick response. Enterprises have needs, taxation responds. On the way to industry upgrading, there are enough policy tools available’ (78) .

(126) 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.

(127) 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.

(128) 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.

(129) 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 (79).

(130) 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 (80). 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 (81). Moreover, authorities often pursue specific political goals including the implementation of the economic plans when allocating land (82).

(131) 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 chemical, and therefore sweetcorn, sector. The present investigation revealed nothing that would call those findings into question.

(132) 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.

(133) 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 fundamental ILO conventions, in particular those on freedom of association and on collective bargaining (83).

(134) 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 (84). 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.

(135) 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 (85). Those findings lead to the distortion of wage costs in China.

(136) No evidence was submitted to the effect that the sweetcorn 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).

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

(138) First, the Chinese financial system is characterised by the strong position of state-owned banks (86), 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) (87) and they regularly implement public policies designed by the GOC.

(139) 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 (88). 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.

(140) 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 (89). 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’ (90) .

(141) For instance, Sunflower Food Industry Xinfeng Co. Ltd., under the supervision of the Ganzhou Municipality’s Financial Office, signed a cooperation agreement with the Ganzhou subsidiary of the state-owned Jiujiang Bank ‘to support the enterprise to expand its business scale, increase its market share and help the development of the enterprise’ (91) .

(142) 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 (92). This is compounded by additional existing rules, which direct finances into sectors designated by the government as encouraged or otherwise important (93). 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.

(143) 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.

(144) Third, 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 (94). Official media in China have recently reported that the CCP called for ‘guiding the loan market interest rate downwards’ (95). Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

(145) 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.

(146) 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.

(147) 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.

(148) The Commission noted that the distortions described in the 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 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 Report.

(149) The Commission recalled 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 section 3.2.1.1. The Commission pointed out that the regulatory setup underpinning those distortions is generally applicable, sweetcorn 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.

(150) 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.

(151) 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.

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

General remarks

(154) As explained in recitals 53 and 54 above, the Commission issued two notes for the file on the sources for the determination of the normal value. These notes described the facts and evidence underlying the relevant criteria, and also addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Malaysia as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

A level of economic development similar to the PRC

(155) In the First Note, the Commission identified Colombia, Malaysia, Mexico, Serbia, Thailand and Türkiye as countries with a similar level of economic development as the PRC according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis where production of the product under investigation was known to take place.

(156) AETMD argued that for Colombia, Malaysia, Serbia, Thailand or Türkiye the Commission’s First Note stated that not all data relating to factors of production and sale were available. They also stated that prices and costs of factors of production and sale were distorted. They therefore supported the use of Mexico as a representative country.

(157) CFNA argued that Malaysia was a suitable representative country because data was available for a company in the same general category as the product concerned, i.e. the production and sale of packaged food products including canned food and drinks. CFNA also argued that Thailand, Colombia and Türkiye should be excluded in the suggested representative countries because of high quantities of imports from China of fresh sweetcorn. In addition, CFNA stated that Mexico should be excluded as it did not import large quantities of cans.

Existence of relevant readily available data in the representative country

(158) In the First Note the Commission indicated that for the countries identified as countries where product under investigation is being produced, i.e. Colombia, Malaysia, Mexico, Serbia, Thailand and Türkiye, the availability of data needed to be further verified in particular with regard to the readily available financial data from producers of the product under investigation.

(159) For Colombia, Serbia and Türkiye no readily available financial data was identified.

(160) For Malaysia it was noted that one company (Fraser and Neave Holdings BHD) had readily available financial data covering the whole investigation period.

(161) For Mexico it was noted that one company (Grupo Herdez) had readily available financial data for 2023.

(162) For Thailand it was noted that two companies (Chin Huay PCL and Sunsweet PCL) had readily available financial data for 2023.

(163) Comments on the First Note were received from CFNA and AETMD.

(164) CFNA argued that Malaysia was a suitable representative country because data was available for a company in the same general category as the product concerned, i.e. the production and sale of packaged food products including canned food and drinks.

(165) In its Second Note the Commission agreed with interested parties that Colombia, Serbia and Türkiye should not be further considered as a representative country, at the provisional stage, due to the lack of readily available financial data.

(166) In light of the above considerations, the Commission informed the interested parties with the Second Note that it intends to use Malaysia as an appropriate representative country and the company Fraser and Neave Holdings BHD, in accordance with Article 2(6a)(a), first indent of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value.

(167) Interested parties were invited to comment on the appropriateness of Malaysia as a representative country and of Fraser and Neave Holdings BHD as a producer in the representative country.

(168) Tongfa Group argued against using the proposed company for SG&A and profit data (Fraser and Neave Holdings BHD) because it does not produce the product under investigation. In its place Tongfa Group proposed a sweetcorn producer in Thailand. The Commission noted that this was contrary to their views on the First Note, at which time Tongfa Group proposed Fraser and Neave Holdings BHD as a suitable company in the representative country.

(169) The Commission could not accept this claim as Thailand has already been rejected as a suitable representative country. In addition, Fraser and Neave Holdings BHD, manufactures products in the same general category as the product under investigation, i.e. food and drink products including canned products.

(170) For Malaysia it was noted that over 70 % of imports of cans and under 15 % of imports of fresh sweet corn were from the PRC.

(171) For Mexico it was noted that there were no imports of fresh sweet corn recorded in GTA. In respect of cans less than 20 % were from the PRC.

(172) For Thailand it was noted that almost all imports of fresh sweet corn and over half the imports of cans were from the PRC.

(173) AETMD argued that for Malaysia and Thailand the Commission’s First Note stated that not all data relating to factors of production and sale were available. They also stated that prices and costs of factors of production and sale were distorted due to the influence of Chinese imports. They therefore supported the use of Mexico as a representative country.

(174) CFNA argued that Thailand, Colombia and Türkiye should be excluded in the suggested representative countries because of high quantities of imports from China of fresh sweetcorn. In addition, CFNA stated that Mexico should be excluded as it did not import large quantities of cans.

(175) In its Second Note the Commission noted that Thailand should not be further considered as a representative country, at the provisional stage, due to the large quantities of imports from China of fresh sweetcorn and cans which make up around 75 % of the cost of manufacturing.

(176) The Commission also stated that Mexico should not be further considered as a representative country because of a lack of imports into Mexico of the main raw material (fresh sweetcorn).

(177) The Commission also commented in the Second Note that there was no evidence of that the prices of imports into Malaysia of cans from China had affected the prices of other imports. Furthermore, less than 15 % of the imports of fresh sweet corn were from China.

(178) In light of the above considerations, the Commission informed the interested parties with the Second Note that it intends to use Malaysia as an appropriate representative country in accordance with Article 2(6a)(a), first ident of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value.

(179) Interested parties were invited to comment on the appropriateness of Malaysia as a representative country.

(180) Following the issue of the Second Note AETMD provided data of exports of fresh sweetcorn from USA to Mexico. It argued that in the light of this data the Commission should use Mexico as a representative country rather than Malaysia. In its rebuttal CFNA pointed out that this information was export data meaning that additional costs were needed to bring the prices to a CIF Mexico duty paid level. CFNA also challenged the value of this data as it pointed out that the quantities involved were limited and therefore the prices were not representative.

(181) The Commission noted that the price of these exports was so high that it was not clear if a distorting factor affected these prices or even if the product exported was comparable to the product under investigation.

(182) CFNA pointed out that there was a discrepancy in the Second Note in relation to the source of cans to be used because the Note suggests using Mexico as a source whereas Malaysia was the representative country. CFNA presumed that an error had been made. This comment was accepted as the reference to Mexico was indeed an error.

(183) CFNA made a further point regarding the use of Malaysia as a source for cans as it suggested using the average price of codes 7310 21 91 and 7310 21 99 . However, this comment was rejected as code 7310 21 91 concerns cans of tinplate and code 7310 21 99 relates to can other than tinplate. Therefore, the Commission decided to use solely code 7310 21 91 as shown in Table 1 above.

(184) CFNA and Tongfa Group also claimed that Mexico’s import quantity of cans was too small in absolute terms and therefore its import price was not representative. However, these parties did not specify to which code its comment referred. The Commission noted that there were no imports of cans into Mexico under code 7310 21 91 .

(185) Following the issue of the Second Note and a review of the comments made by interested parties the Commission concluded that Malaysia remained the most appropriate source to establish undistorted costs. This was largely due to the availability of undistorted benchmarks for the main FOPs (fresh sweetcorn and cans). In addition, there remained a lack of suitable undistorted and representative data available for fresh sweetcorn and cans into Mexico.

Level of social and environmental protection

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

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

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

(189) 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 GTA to establish the undistorted cost of some of the factors of production, notably the raw materials. In addition, the Commission stated that it would use the Malaysian national statistics for establishing undistorted costs of labour (97) (98) (99) and energy (100) (101).

(190) In the Second Note, the Commission also informed the interested parties that due to the large number of factors of production of the sampled exporting producers that provided complete information and the negligible weight of some of the raw materials in the total cost of production, these negligible items were grouped under ‘consumables’. Further, the Commission informed that it will 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 in the appropriate representative country.

(192) The Commission included a value for manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. To establish this amount, the Commission used the costs incurred by the sampled exporting producers as a percentage of the direct costs of manufacturing. The methodology is duly explained in recital 202.

Raw materials

(193) 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. An 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 (102). The Commission decided to exclude imports from the PRC into the representative country as it concluded in section 3.2.1 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)(b) 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.

(194) For a number of factors of production the actual costs incurred by the cooperating exporting producers represented a negligible share of total raw material costs in the investigation period. As the value used for these had no appreciable impact on the dumping margin calculations, regardless of the source used, the Commission decided to include those costs into consumables as explained in recital 190.

(195) Duties applicable to the importation of the factors of production into Malaysia were added where applicable.

(196) The Commission added a percentage to the imported prices to cover transportation of the factors or production from the border to the cooperating exporting producer in order to obtain the undistorted transport cost. This addition was equivalent to the actual percentage of delivery costs for raw materials of each sampled exporting producer. The Commission considered that, in the context of this investigation, this methodology could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

Labour

(197) The Malaysian Department of Statistics (103) publishes detailed information on wages in different economic sectors in Malaysia. Its reports show monthly salaries and wages in the manufacturing sector. The average monthly value in the investigation period has been duly adjusted for other contributions by adding the Employees Provident Fund (EPF) contributions, (13 %), the Social Security Organization (SOCSO) contributions (1,75 %), the Employment Insurance System (EIS) contributions (0,2 %) and the Human Resource Development Fund (HRDF) contributions (1 %) (104) (105).

Electricity

(198) The Commission has used the electricity price statistics published by Tenaga Nasional Berhad (106). The Commission used the data of the industrial electricity prices in the consumption band ‘Tariff E2 - Medium Voltage Peak/Off-Peak Industrial Tariff’ for peak usage in kWh, 0,355 RM per kWh (0,548 CNY per kWh).

Natural gas

(199) The price of natural gas for industrial users in Malaysia is published by the Malaysian Energy Commission (Suruhanjaya Tenaga) (107). The Commission used the most recent available data and indexed it for inflation to reflect the price of the investigation period

(200) The Commission therefore used the data of the average industrial gas prices covering the investigation period, namely 1,79 CNY/m3.

Manufacturing overhead costs, SG&A and profits

(201) 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.

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

(203) For establishing an undistorted and reasonable amount for SG&A and profit, the Commission relied on the financial data for Fraser and Neave Holdings BHD as extracted from its Annual Report 2024 (excluding transport) covering the investigation period.

Calculation

(204) On the basis of the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

(205) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the cooperating exporting producers. These consumption rates were verified during the verification. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in section 3.2.3.

(206) In respect of the Sunflower Group, a revised version of the consumption rates per product type was received during the verification visit.

(207) In respect of the Tongfa Group, the method used to apportion consumed hours for labour to the product under investigation was discussed during the verification visit. It was explained that Tongfa Group produced many canned products in the investigation period. The method used to apportion consumption rates for labour hours for the production under investigation as compared to other products was challenged at the verification visit by the Commission because the method used was only supported by data in spreadsheets which did not constitute a verifiable system as they could not be crossed-checked against other company records. Moreover, the case team inquired why Tongfa Group did not use, for labour, the same allocation key used for other factors of production (e.g. energy), being the share of the volume of the product under investigation in the volume of total company’s production. The Commission therefore issued a letter under Article 18 of the basic Regulation to inform Tongfa Group of its proposal to base the consumption of labour hours on the facts available.

(208) Tongfa Group replied by stating that it had cooperated with the investigation to the best of its ability in respect of the issue of labour and all aspects of the investigation. It wished to be considered as a fully cooperating party.

(209) Although the Commission still regards Tongfa as a cooperating party in this investigation, the Commission maintains that Article 18 should apply since Tongfa did not provide the necessary information in relation to the calculation of labour hours. Accordingly, labour hours should be calculated using the facts available. Therefore, at this stage, labour hours consumed were calculated using an apportionment ratio of production quantity of the product under investigation to total production quantities of all products.

(210) Once the undistorted manufacturing cost was established, the Commission applied the manufacturing overheads, SG&A, profit and depreciation as noted in recital 203. They were determined on the basis of the financial statements of Fraser and Neave Holdings BHD as explained in section 3.2.2.

(211) Then the Commission added manufacturing overheads and depreciation to the undistorted cost of manufacturing in order to arrive at the undistorted costs of production. As explained in recital 192, this accounted in total for around 6 % of the direct costs of manufacturing of each sampled company. The calculation of the overhead percentages used was disclosed to each sampled company.

(212) To the costs of production established as described in the previous recital, the Commission applied SG&A and profit of Fraser and Neave Holdings BHD. SG&A expressed as a percentage of the Costs of Goods Sold (‘COGS’) and applied to the undistorted costs of production, amounted to 17 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production, amounted to 19 %.

(213) On that basis, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

(214) In respect of the Sunflower Group, the exporting producer exported to the Union either directly to independent customers in the Union or through unrelated traders outside the Union.

(215) In respect of the Tongfa Group, the producer (Zhangzhou Tongfa Foods Industry Co., Ltd - hereinafter ‘ZT’) first sold the product concerned to a related trader (Fujian Tongfa Foods Group Co., Ltd - hereinafter ‘FT’). FT then sold to the Union either directly to independent customers in the Union or through unrelated traders outside the Union.

(216) The export price of both groups was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

(217) Article 2(10) of the basic Regulation requires the Commission to make a fair comparison between the normal value and the export price at the same level of trade and to make allowances for differences in factors which affect prices and price comparability. In the case at hand the Commission chose to compare the normal value and the export price of the sampled exporting producers at the ex-works level of trade. As further explained below, where appropriate, the normal value and the export price were adjusted in order to: (i) net them back to the ex-works level; and (ii) make allowances for differences in factors which were claimed, and demonstrated, to affect prices and price comparability.

(218) As explained in recital 210, the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG&A (excluding transport) and for profit, which were considered to be reasonable for that level of trade. Therefore, no adjustments were necessary to net the normal value back to the ex-works level.

(219) In order to net the export price back to the ex-works level of trade, adjustments were made on the account of inland freight, handling loading and ancillary expenses.

(220) Allowances were made for the following factors affecting prices and price comparability: credit costs, bank charges and packaging.

(221) In respect of the Tongfa Group, as all Union sales were made via a related trader in China (FT), an adjustment to the export price was made to cover the SG&A and profit of the related trader under Article 2(10)(i) of the basic Regulation. The source and level of these rates was disclosed to the party concerned.

(222) In respect of the Sunflower Group, the method used to calculate credit costs was discussed during the verification. The company used the interest rates of the China exchange trade system (108). The case team highlighted during the verification that these interest rates were not appropriate as they were not the interest rate charged by commercial banks for commercial loans. The case team therefore asked the company to review the level of the interest rate for the calculation of the credit costs. However, the Sunflower Group did not provide the necessary revised information in relation to the interest rates.

(223) The Commission therefore issued a letter under Article 18 of the basic Regulation to inform the Sunflower Group of its proposal to base the credit costs on the facts available.

(224) Sunflower Group replied by stating that they used the rates available to them at the time and that if the Commission used alternative rates these should reasonably reflect the situation surrounding international trade transactions.

(225) The Commission, therefore, maintained that in respect of the calculation of credit costs Article 18 should apply, meaning that the credit costs should be calculated using the facts available. Credit costs were thus calculated using rates of the Bank of China. Such rates more reasonably reflected the rates applicable for commercial loans.

(226) In respect of both sampled exporting producers’ exports to the Union were made on a FOB basis. Therefore, the methodology used to calculate CIF prices, by adding ocean freight and insurance, was discussed during the verification. It was found that both companies had underestimated significantly these ocean freight rates. The case team therefore asked the company to review the level of freight rates for the calculation of the CIF prices. However, the sampled exporting producers did not provide any revised necessary information on ocean freight rates, nor the estimated CIF prices.

(227) The Commission therefore issued a letter under Article 18 of the basic Regulation to inform both groups of its proposal to base the ocean freight rates on the facts available as the data supplied had been false or misleading and since, in any event, the company had failed to supply the necessary information within the time limit prescribed by the Commission.

(228) Sunflower Group replied by stating that they acquired the rates used from a customer and it covered a 15-day period in July 2024. Sunflower Group therefore disagreed that the information was false or misleading. However, the investigation showed that the freight rates in the investigation period fluctuated substantially and during the 15-day period in July 2024 of the ocean freight rates were very high. The Commission considered it inappropriate to use these ocean freight rates to the whole of the investigation period and found that it was misleading of the Sunflower Group to have submitted such information arguing that these rates should be applied to the whole IP.

(229) Tongfa Group replied to the Article 18 letter by stating that they had cooperated to the best of their ability and did not consider that the information they had supplied was false or misleading. However, the investigation showed that the data supplied was accurate for only around 70 % of sales to the Union by net weight. The Commission pointed out during the investigation that for the remaining 30 % of sales the approach taken did not take into account the date of the shipment and consequently, the approach taken for such sales was clearly inaccurate. Therefore, it was appropriate to recalculate the freight rates for 30 % of the Union sales.

(230) Sunflower Group proposed that the Commission used the actual ocean freight costs incurred by exporting producers in other anti-dumping investigations. However, this claim was rejected as the ocean freight rates used by the Commission related to the product concerned and therefore were more accurate.

(231) The Commission, therefore, maintained that in respect of the calculation of the CIF prices, Article 18 should apply, meaning that ocean freight rates should be calculated using the facts available. Such ocean freight rates were calculated using average monthly information of four customers of the sampled exporting producers. Such ocean freight rates were considered appropriate as they related to exports from China to the Union of the product concerned during the investigation period.

(232) The rates involved were disclosed to the sampled producers.

(233) For the sampled cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

(235) For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers, disregarding the margins of the exporting producers with zero and de minimis dumping margins. As explained in recitals 40 to 42 above, the Commission has applied Article 18 to a limited number of issues concerning the data supplied by each of the sampled exporting producers and for the most part revised the companies’ data rather than replace it with other data. The application of Article 18 did not have a major impact on the calculation of the normal value. For this reason, the Commission considered it appropriate to establish the dumping margin for other cooperating companies on the basis of the dumping margins established for the sampled exporting producers.

(236) On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 48,1 %.

(237) For all other exporting producers in the PRC, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total imports from the country concerned to the Union in the investigation period, that were established on the basis of Eurostat.

(238) The level of cooperation in this case is high because the exports of the cooperating exporting producers constituted over 90 % of the total imports during the investigation period. On this basis, the Commission decided to establish the dumping margin for non-cooperating exporting producers at the level of the cooperating sampled individually examined company with the highest dumping margin.

(239) Import statistics are reported in Eurostat (Comext) as the net weight, representing the weight related to the sweetcorn kernels and the liquid. Consequently, the net weight is used as the unit of measurement during this investigation.

(240) The like product was manufactured by 11 producers and producer groups in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

(241) The total Union production during the investigation period was established at around 259 400 tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as direct information from the sampled Union producers and the Union producers supporting the complaint. As indicated in recital 30, the two sampled Union producers represented more than [29 - 38] % of the total Union production of the like product.

(242) The Commission established the Union consumption on the basis of sales made by the Union industry on the Union market and Eurostat data for imports.

(244) The total Union consumption increased by 3 % between 2021 and 2022 from about 299 020 tonnes in 2021 to about 327 620 tonnes in 2022. Between 2022 and 2023, consumption decreased by 4 percentage points to about 295 208 tonnes. Until the end of the investigation period, consumption dropped further by 8 percentage points to 272 245 tonnes.

(245) The Commission established the volume of imports on the basis of Eurostat (Comext) data. The market share of the imports was established on the basis of the available Eurostat data.

(247) The volume of imports from China showed a strong increase over the period considered. While the imports increased between 2021 and 2022 by 173 % from about 6 500 tonnes to 17 710 tonnes, they surged between 2022 and 2023 by 446 percentage points to 46 631 tonnes. Until the end of the investigation period, the imports were slightly reduced to about 40 050 tonnes, remaining at a very substantial level.

(248) The market share of imports from China showed a similar development as the volume of imports with a sharp increase from 2 % in 2021 to 15 % in the investigation period.

(249) The Commission established the prices of imports on the basis of EUR per tonne (net weight) reported in Eurostat statistics (Comext). Price undercutting of the imports was established on the basis of CIF prices for the sampled exporting producers and the verified questionnaire replies of the sampled Union producers.

(251) The average price of imports from the PRC showed an increase of 35 % between 2021 and 2022 from 1 164 EUR per tonne to 1 570 EUR per tonne. However, these prices fell by 25 percentage points in 2023. Prices in the investigation period were only 2 % higher than in 2021. Overall, import prices remained substantially lower compared to Union prices as reflected in Table 8.

(253) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period. It showed a significant weighted average undercutting margin of between 7,2 % and 28,6 % by the imports from the country concerned on the Union market.

(254) The adjustments made to the export price as described at section 3.4.2 above also apply to the CIF prices used in the undercutting calculations.

(255) In any event, regardless of the findings of undercutting, the Commission found that the imports from China suppressed the prices of the Union industry, especially via the tender mechanism, as explained below in section 4.6.4 and caused a significant drop of sales volume and market share of Union producers.

(256) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(257) As mentioned in recital 30, sampling was used for the determination of possible injury suffered by the Union industry.

(258) The sweetcorn market is characterised by the existence of two sales channels, i.e. sales under the producer’s own brand and sales under retailer’s brand. Retailer’s brand sales command lower selling prices are in competition with imports from China and are under significant price pressure and represented about 70 % of the sales in the Union during the IP and [35 – 55 %] for the sampled Union producers. Sales related to own brand products will usually trigger higher selling costs intended notably for marketing and advertising and will also command higher selling prices. Evidence collected by the Commission points to the existence of price pressure exercised by the imports also with respect to this second sales channel. In essence, the evidence collected by the Commission pointed to the existence of injury caused by the product concerned as a whole, regardless of the sales channel.