Commission Implementing Regulation (EU) 2026/2107 of 22 September 2026 imposing a definitive countervailing duty on imports of continuous filament glass fibre products (GFR) originating in Egypt following an expiry review pursuant to Article 18 of Regulation (EU) 2016/1037 of the European Parliament and of the Council

Image omitted; see official source	Official Journal of the European Union	EN L series
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	2026/2107	23.9.2026

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union [^ntr1-L_202602107EN.000101-E0001] (‘the basic Regulation’), and in particular Article 18 thereof,

Whereas:

1. PROCEDURE

1.1.   Previous investigations and measures in force

• (1) By Commission Implementing Regulation (EU) 2020/870 [^ntr2-L_202602107EN.000101-E0002] (‘the original Regulation’), the European Commission (‘the Commission’), imposed a definitive countervailing duty on imports of continuous filament glass fibre products originating in the Arab Republic of Egypt (‘Egypt’ or ‘the country concerned’) following an anti-subsidy investigation (‘the original investigation’). The countervailing duties currently in force amount to 13,1 % (‘the original measures’).

• (2) By Commission Implementing Regulation (EU) 2026/831 [^ntr3-L_202602107EN.000101-E0003], the Commission imposed an anti-dumping duty on, inter alia, imports of continuous filament glass fibre products originating in Egypt. The anti-dumping duty currently in force amounts to 11 %.

• (3) Anti-dumping and anti-subsidy measures are also in force on imports of GFR originating in the People’s Republic of China (‘PRC’, ‘China’). Anti-dumping measures ranging from 7,3 % to 13,8 % were first imposed in 2011 [^ntr4-L_202602107EN.000101-E0004]. Anti-subsidy measures ranging from 4,9 % to 10,3 % were imposed in 2014. The resulting combined countervailing and anti-dumping measures ranged from 4,9 % to 30,2 % [^ntr5-L_202602107EN.000101-E0005]. After successive interim and expiry reviews, the combined measures on imports from China currently range from 24 % to 33.2 %. The Commission is currently conducting an expiry review of the anti-subsidy measures [^ntr6-L_202602107EN.000101-E0006].

• (4) Measures are also in force on imports of GFR originating in Thailand (between 15,3 % and 25,4 %) and Bahrain (11,8 %) [^ntr7-L_202602107EN.000101-E0007].

1.2.   Request for an expiry review

• (5) Following the publication of a notice of impending expiry [^ntr8-L_202602107EN.000101-E0008] on imports of continuous filament glass fibre products originating in Egypt, the Commission received a request for a review pursuant to pursuant to Article 18(2) of the basic Regulation.

• (6) The request for review was submitted on 21 March 2025 by Glass Fibre Europe (‘the applicant’, ‘GFE’) on behalf of the Union industry of continuous filament glass fibre products in the sense of Article 10(6) of the basic Regulation. The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation of subsidisation and continuation or recurrence of injury to the Union industry.

• (7) Prior to the initiation of the expiry review, and in accordance with Article 10(7) of the basic Regulation, the Commission notified the Government of Egypt (‘GOE’) that it had received a properly documented review request. The Commission invited the GOE for pre-initiation consultations with the aim of clarifying the situation as regards the contents of the review request and arriving at a mutually agreed solution. While the Commission understood that the GOE would be in a position to obtain the necessary information regarding the allegations put forward in the request, it also offered the GOE the possibility to extend the invitation to the consultations to the Government of China (‘GOC’), in case the GOE considered that the participation of the GOC would have been useful to clarify the situation.

• (8) Consultations with the GOE were held on 23 June 2025, when the GOE expressed its views regarding the initiation of the investigation to the Commission. The GOE argued first that the investigation of ‘cross-country’ subsidies breached the WTO Agreement on Subsidies and Countervailing Measures (‘SCM Agreement’). More specifically, there was allegedly no evidence that Egypt had ‘acknowledged and adopted’ Chinese subsidies, and that, therefore, such financial contribution cannot be attributed to Egypt.

• (9) Second, the GOE considered that the support for capital investment to the exporting producer in Egypt does not constitute a subsidy under the basic Regulation, since the support was not granted by the exporting country’s government, and because under Egypt’s Investment Law No. 72/2017, capital incentives are granted across sectors and are not specific to the GFR industry.

• (10) Third, the GOE claimed that VAT and import duty exemptions on equipment that is imported into Egypt do not apply specifically to GFR producers and therefore do not constitute a subsidy under the basic Regulation. In addition, there was no benefit in the period of 1 January 2024 to 31 December 2024 (‘the review investigation period’, or ‘RIP’) since the exporting producer in Egypt had no VAT credit balance in that period, and government revenue is not foregone since the GOE retains the right to recover import duties for a period of five years.

• (11) Fourth, the GOE considered that the enterprise income tax exemption that was implemented via the 2016 special tax rule for treating foreign exchange losses as a tax loss does not confer a benefit. Furthermore, it is not specific to GFR producers since all entities similarly affected can access this treatment.

• (12) Finally, the GOE claimed that the plots of land purchased by the exporting producer in Egypt were not provided by the GOE for less than adequate renumeration and did not constitute a subsidy under the basic Regulation, since land in the TEDA Suez Zone is allocated at publicly disclosed rates, with no evidence of the provision below market value.

• (13) The Commission addressed the first claim in recitals (67) to (73) of this Regulation.

• (14) As regards the second claim, the Commission referred to the original investigation, which established that the equity injections that were found to be countervailable, were supported by the Chinese State with the aim of setting up and expanding the production facilities of the China National Building Material Co. Ltd. (‘CNBM’) in Egypt. Such support would equally fall under the items agreed upon between China and Egypt in the Cooperation Agreement to set up the Suez Economic and Trade Cooperation Zone (‘SETC-Zone’). The support was therefore attributable to the GOE, even though it was not granted directly by Egypt, the exporting country’s government [^ntr9-L_202602107EN.000101-E0009].

• (15) Furthermore, the original investigation showed that the mandate and objective of the Chinese state-owned entities that have ultimate control over the exporting producer’s parent companies is to implement governmental policies and plans, including by providing financial support and funding for the encouraged sectors, among which GFR, in order to enact China’s going-out strategy. Therefore, this form of cross-country capital support was deemed to be specific to the GFR industry in Egypt. Whether according to Egypt’s investment laws capital incentives are granted across sectors within Egypt, is therefore not relevant to this provision [^ntr10-L_202602107EN.000101-E0010]. Third, concerning the VAT and import duty exemptions on imported equipment, the Commission recognises that these exemptions do not apply specifically to the GFR industry in Egypt. However, as detailed in section 3.5.4 of this Regulation, it does apply only to the companies located in Economic Zones of a Special Nature, such as the Suez Canal Economic Zone (‘SCZone’), which confirms that it is not generally applicable in Egypt and is specific within the meaning of Article 4(2)(a) of the basic Regulation. The Commission further noted that the GOE’s claims regarding the alleged non-existence of a benefit and government revenue forgone were addressed in the original Regulation [^ntr11-L_202602107EN.000101-E0011].

• (16) The Commission addressed the fourth claim in sections 3.7.4 and 3.7.5 of this Regulation.

• (17) Fifth, concerning the claim that in the original investigation there was no evidence that land was provided to the exporting producer in Egypt for less than adequate renumeration, the Commission noted that this claim runs counter to the findings in the original Regulation, which rely on the facts on file or on facts available in case of non-cooperation [^ntr12-L_202602107EN.000101-E0012]. The Commission’s findings regarding how the benefit amount of this countervailable subsidy was established were subsequently confirmed by the Court of Justice of the European Union [^ntr13-L_202602107EN.000101-E0013]. The Commission has furthermore confirmed that these subsidies have continued and expanded during the review investigation period (see recitals (124) to (220) of this Regulation). Finally, while the Commission understands that the usufruct of land in the TEDA Suez Zone is allocated based on rates set by the GOE, this is irrelevant to the plots of land on which the exporting producer operates, since those have been purchased by the company rather than obtained via usufruct rights.

• (18) Based on the above arguments, the claims of the GOE were rejected.

1.3.   Initiation of an expiry review

• (19) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation [^ntr14-L_202602107EN.000101-E0014], that sufficient evidence of a likelihood of subsidisation and injury existed to justify the initiation of an expiry review, the Commission, on 24 June 2025, initiated an expiry review with regard to imports into the Union of continuous filament glass fibre products originating in Egypt on the basis of Article 18(2) of the basic Regulation [^ntr15-L_202602107EN.000101-E0015]. It published a Notice of Initiation in the Official Journal of the European Union [^ntr16-L_202602107EN.000101-E0016] (‘the Notice of Initiation’).

1.4.   Review investigation period and period considered

• (20) The investigation of a continuation or recurrence of subsidisation covered the period of 1 January 2024 to 31 December 2024 (‘the review investigation period’, or ‘RIP’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period starting on 1 January 2021 to the end of the review investigation period (‘the period considered’).

1.5.   Interested parties

• (21) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, the known producer in Egypt, the GOE, known importers, users, traders, as well as associations known to be concerned about the initiation of the expiry and invited them to participate. The GOC was also informed and invited to participate, in view of the GOC’s involvement and very close cooperation with the GOE as regards the subsidisation granted to GFR originating in Egypt.

• (22) Interested parties had an opportunity to comment on the initiation of the expiry review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. No comments on initiation, nor hearing requests were received.

1.6.   Sampling

• (23) In the Notice of Initiation, the Commission stated that it might sample interested parties in accordance with Article 27 of the basic Regulation.

1.6.1.   Sampling of Union producers

• (24) In the 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 representativity in terms of volume of production and sales of the like product in the Union between 1 January 2024 and 31 December 2024. This sample consisted of three Union producers. The sampled Union producers accounted for 63 % of the estimated total volume of production and 70 % of sales of the like product in the Union. In accordance with Article 27(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No comments were received on the provisional sample. The sample was representative of the Union industry.

1.6.2.   Sampling of importers

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

• (26) No unrelated importer replied to the sampling form.

1.6.3.   Sampling of exporting producers in Egypt

• (27) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known producers in Egypt to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the Arab Republic of Egypt to the European Union to identify and/or contact other producers, if any, that could be interested in participating in the investigation.

• (28) Only one exporting producer from Egypt provided a sampling reply and sampling was therefore not deemed necessary. The GOE confirmed that this exporting producer continued to be the only GFR producer in Egypt. The Commission invited the company to complete the questionnaire for exporting producers.

1.7.   Replies to the questionnaire

• (29) To obtain the information deemed necessary for its investigation, the Commission published online [^ntr17-L_202602107EN.000101-E0017] the questionnaires for the exporting producers, the unrelated importers, the Union producers and their association, the users and sent a questionnaire to the GOE.

• (30) Questionnaire replies were received from the GOE, the exporting producer Jushi Egypt for Fiberglass Industry S.A.E (‘Jushi Egypt’), the Union producers 3B Fibreglass Company Sprl (‘3B Fiberglass’), European Owens Corning Fiberglas Sprl (‘Owens Corning’), Johns Manville Slovakia a.s, (‘Johns Manville’) as well as the association of Union producers, Glass Fibre Europe. Users Tolnatext Fonalfeldolgozó és Műszakiszövet-gyártó Bt. (‘Tolnatext’) and Rymatex sp. z o. o. (‘Rymatex’) also submitted replies to the users’ questionnaire.

1.8.   Verification

• (31) The Commission sought and verified all the information deemed necessary for the determination of likelihood of continuation or recurrence of subsidisation and injury and for the determination of the Union interest. Verification visits pursuant to Article 26 of the basic Regulation were carried out at the premises of the following groups of companies:

• — Union producers:

• — 3B Fibreglass, Battice, Belgium;

• — Remote cross-checking (‘RCC’) was carried out for Owens Corning and Johns Manville.

• — Exporting producer in Egypt:

• — Jushi Egypt, Suez, Egypt.

• (32) A verification visit took place also at the premises of the GOE in Cairo and Ain Sokhna of the following Egyptian government authorities:

• — General Authority for Investment (‘GAFI’), Cairo, Egypt;

• — General Authority of the Suez Canal Economic Zone (‘General Authority of the SCZone’), Suez Canal Economic Zone, Egypt.

1.9.   Subsequent procedure

• (33) On 8 July 2026, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the countervailing duties in force. All parties were granted a period within which they could make comments on the disclosure.

• (34) The GOE commented on the disclosure. These comments were considered by the Commission and assessed in the relevant sections below. The exporting producer in Egypt did not comment on the disclosure. No party requested a hearing.

2. PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review

• (35) The product under review is the same as in the original investigation, namely chopped glass fibre strands, of a length of not more than 50 mm; glass fibre rovings, excluding glass fibre rovings which are impregnated and coated and have a loss on ignition of more than 3 % (as determined by the ISO Standard 1887); and mats made of glass fibre filaments excluding mats of glass wool, currently falling under CN codes 7019 11 00 , ex 7019 12 00 (TARIC codes 7019 12 00 22, 7019 12 00 25, 7019 12 00 26, 7019 12 00 39), 7019 14 00 and 7019 15 00 . The CN and TARIC codes are given for information only without prejudice to a subsequent change in the tariff classification (‘the product under review’).

• (36) The product under review is a raw material most often used to reinforce thermoplastic and thermoset resins in the composites industry. The resulting composite materials (filament glass fibre reinforced materials) find their use in a large number of industries: transportation (automotive, marine, aerospace, military), electric/electronics, wind energy, building and construction, tanks/pipes, consumer goods etc.

2.2.   Product concerned

• (37) The product concerned is the product under review originating in Egypt.

2.3.   Like product

• (38) As established in the original investigation, this expiry review investigation confirmed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

• — the product concerned when exported to the Union,

• — the product under review produced and sold on the domestic market of Egypt,

• — the product under review produced and sold by the exporting producers to the rest of the world; and

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

• (39) These products are therefore considered to be like products within the meaning of Article 2(c) of the basic Regulation.

2.4.   Claims regarding product scope

• (40) No claims were received regarding the product scope.

3. LIKELIHOOD OF CONTINUATION OR RECURRENCE OF SUBSIDISATION

• (41) In accordance with Article 18 of the basic Regulation, and as stated in the Notice of Initiation, the Commission examined whether the exporting producer concerned continued to benefit from countervailable subsidies during the review investigation period and whether the expiry of the existing measures would likely lead to a continuation or recurrence of subsidisation.

• (42) On the basis of the information contained in the request for review, the Memorandum of Sufficiency of Evidence, Notice of Initiation, and the GOE and exporting producer’s reply to the Commission’s questionnaire, the alleged subsidisation through the following subsidies by the GOE were investigated:

Direct transfer of funds

• (a) Provision of preferential loans

• (b) Support for capital investment

Government revenue forgone or not collected that is otherwise due

• (c) Enterprise income tax privileges

• (d) VAT exemptions and import tariff rebates for imported equipment

• (e) VAT exemptions and import tariff rebates for imported materials

Provision of goods or services for less than adequate remuneration

• (f) Provision of land

• (43) The original investigation found that subsidies in the form of government revenue foregone or not collected that is otherwise due and of provision of land for less than adequate remuneration (under (c), (d), (e), and (f) above) were provided directly by the GOE to Jushi Egypt [^ntr18-L_202602107EN.000101-E0018]. However, direct transfers of funds were found to be provided by the GOC through banks which are state-owned or otherwise directed by the state [^ntr19-L_202602107EN.000101-E0019].

• (44) The original investigation found that the GOE had acknowledged and adopted these subsidies, and they were thus attributed to the GOE as its own subsidies. The GOE was therefore considered to be the granting authority for the purpose of Article 4(1) of the basic anti-subsidy Regulation in respect of these subsidies [^ntr20-L_202602107EN.000101-E0020].

• (45) The request for review alleged that the above subsidies continued in the same way.

3.1.   Cooperation from the Egyptian exporting producer and the GOE

• (46) The exporting producer Jushi Egypt and the GOE cooperated partially in the investigation and provided questionnaire replies.

• (47) The questionnaire for the GOE also included a specific questionnaire for TEDA Egypt Investment Co. (‘TEDA Egypt’), and the GOE was requested to provide this information as well for Tianjin Teda Investment Holding Co. Ltd. (‘TEDA Tianjin’). The GOE was asked to collect the responses provided by these entities and to send it to the Commission.

• (48) During the investigation, both parties informed the Commission that they would not cooperate in on-site verifications to assess the completeness and accuracy of the submitted information. Accordingly, by the respective Notes Verbale of 11 November 2026 and of 18 November 2026, the Commission informed the GOE of its intention to apply Article 28 of the basic Regulation and base its findings regarding the exporting producer and the GOE on the facts available. Both parties however later informed the Commission that they would resume cooperation and participate in on-site verifications, which took place as described in recital (31).

• (49) The questionnaire replies submitted by the exporting producer and the GOE did not include all the information required in the questionnaire. The Commission requested the outstanding information through deficiency letters or during the verification visit to the exporting producer and the GOE.

• (50) However, the Commission considered that even after the verification it had not received full explanations to certain questions raised during the investigation, and certain documents requested were not submitted by the exporting producer and by the GOE. In addition, as regards the GOE specifically, even though the visit to TEDA Egypt was originally planned for the verification visit, TEDA Egypt ultimately refused to participate in the verification visit.

• (51) Accordingly, by Note Verbale of 18 March 2026, the Commission informed the GOE of this fact, highlighting that it intended to apply Article 28 of the basic Regulation in respect of the issues that were not fully clarified by the GOE and invited it to comment. Additionally, by Note Verbale of 30 March 2026, the Commission informed the GOE that it intended to apply Article 28 of the basic Regulation and base its findings regarding the exporting producer Jushi Egypt partially on the facts available.

• (52) The GOE objected to the application of Article 28 of the basic Regulation towards the GOE, arguing that this should be an exceptional measure which requires demonstrating that the concerned party has deliberately refused to grant access to necessary information or has significantly impeded the investigation. The GOE stressed that it cooperated diligently throughout the investigation and that any difficulties in providing all the requested details stemmed from factual or legal inability to provide the information.

• (53) The GOE further stressed that relying on Article 28 of the basic Regulation cannot be used as a punitive tool aimed at penalising the interested party. Rather, the sole purpose of resorting to facts available under this provision is to allow the Commission to continue its investigation despite the absence of certain data.

• (54) Finally, the GOE stressed that the Commission did not provide adequate reasoning to justify the total rejection of actual data provided by the GOE, as required under Article 28(4) of the basic Regulation.

• (55) In that regard, the Commission clarified that, as was indicated in the Note Verbale of 18 March 2026 and other communication with the GOE, the Commission recognised the efforts and diligence with which the GOE cooperated with the Commission and the fact that it provided most of the requested explanations and documents. As was explained in the Note Verbale, the Commission did not intend to completely reject all data provided by the GOE. Instead, the Note Verbale was to inform the GOE that the Commission intends to resort to facts available only with regard to a number of issues which were not fully clarified, precisely to allow the Commission to continue its investigation despite the absence of certain data.

• (56) Furthermore, the Commission highlighted that the Note Verbale was not imputing an attempt at concealing information. In any event, it is immaterial whether certain information and/or documents would be deliberately concealed or could not be provided for technical, factual, or legal reasons. The list of missing information provided with the Note Verbale was a statement of facts without a value judgment, indicating which documents were requested but not received and which explanations the Commission considered incomplete, thus warranting the application of facts available limited to those points. Specific elements for which the Commission relied on facts available are detailed in the relevant parts of the below analysis.

• (57) The exporting producer also objected to the application of Article 28 of the basic Regulation. It pointed out that the information requested by the Commission and not provided by the company, primarily related to alleged inter-company financing by certain related companies in China or in third countries with parent companies in China. It argued that this information was requested by the Commission to investigate alleged financial contributions from the GOC or Chinese state entities and attribute those to the GOE, and that this approach in the original regulation and expiry review investigation was inconsistent with the WTO panel report in the case European Union – Countervailing and Anti-Dumping Duties on Stainless Steel Products from Indonesia (DS616) [^ntr21-L_202602107EN.000101-E0021]. The company therefore considered that the requested information was not necessary for the Commission to reach WTO-consistent findings.

• (58) The company further stressed that it did not exercise control over related entities outside the Jushi Group and, therefore, was not in a position to compel those companies to provide the information requested by the Commission. It argued that, for this reason, the Commission should use the information that it already had on record for those related entities, rather than fully rejecting their information.

• (59) In that regard, the Commission noted that it has appealed the findings concerning cross-border subsidies in the panel report in DS616. Therefore, it disagrees that its approach is inconsistent with WTO case law. The Commission also referred to the Court of Justice’s rulings which is detailed in recitals (69) - (70). Therefore, it maintained that the information requested was necessary and that the application of Article 28 of the basic Regulation was justified and warranted.

• (60) Furthermore, the Commission clarified that this review investigation covered any financial contribution provided by the GOC in the context of its close cooperation with the GOE, as specified in detail in the complaint. The financial contributions received by Jushi Egypt from the GOC covered in this proceeding can be provided by the GOC either directly, or indirectly via its parent companies that are under Chinese state control.

• (61) With regards to the exporting producer, the review investigation found that the Jushi Egypt’s main parent companies are the China-based Jushi Group Co. Ltd (the ‘Jushi Group’) and another parent company (the ‘second parent company’) that is ultimately owned by a Chinese state-owned fund. The Jushi Group is wholly owned by China Jushi Co. Ltd (‘Jushi China’), which is part of the China National Building Material Group Co. Ltd. (‘CNBM group’) and is ultimately controlled by the Chinese State-owned Assets Supervision and Administration Commission of the State Council (‘SASAC’).

• (62) The Commission considers that the exporting producer and its parent companies are related within the meaning of Article 127 of Commission Implementing Regulation (EU) 2015/2447 [^ntr22-L_202602107EN.000101-E0022], which, as per the instructions of the questionnaire and the subsequent correspondence, warrants the submission of a subsidy questionnaire reply as a related party, which was deemed necessary for the investigation. The claim that the company could not compel its related entities to provide the requested information can therefore not be accepted. The Commission can legally rely on facts available under Article 28 of the basic Regulation when the necessary information is not provided or made available by parties, regardless of the reasons.

• (63) The Commission therefore rejected these claims. Accordingly, the Commission used for its analysis all facts available to it, in particular:

• — The findings of the original investigation;

• — The findings of the most recent anti-subsidy investigations and expiry reviews carried out by the Commission concerning encouraged industries in China, such as:

• — The Commission Implementing Regulation imposing countervailing duties on imports of new battery electric vehicles originating in China [^ntr23-L_202602107EN.000101-E0023]; and

• — The Commission Implementing Regulation imposing countervailing duties on imports of aluminium road wheels Originating in Marocco [^ntr24-L_202602107EN.000101-E0024]; and

• — International benchmarks, such as the interest deposit rates and inflation rates for Egypt, as published by the World Bank.

3.2.   Cooperation between Egypt and China and attribution analysis

• (64) Jushi Egypt is located in the SETC-Zone. The zone covers an area of 7,34 km², which is divided into a starting area of 1,34 km² and an expansion area of 6 km².

• (65) The original investigation found that this special economic zone was set up jointly by China and Egypt. The factual and legal background of the setup of the SETC-Zone was described in recitals (35) – (58) of the original investigation.

• (66) Against such background, in the original investigation the Commission had found that GOE endorsed the granting by the GOC of preferential financial support to the producers located in the SETC-Zone, in line with the agreed commitments to develop and support the economic activities within the zone.

• (67) During the pre-initiation consultations held with GOE, the government argued that the investigation of such ‘cross-country’ subsidies breached the WTO Agreement on Subsidies and Countervailing Measures (‘SCM Agreement’) and that there was no evidence that Egypt had ‘acknowledged and adopted’ Chinese subsidies. The GOE and the exporting producer repeated these claims throughout the investigation, claiming that there is no legal basis either in the SCM Agreement or in the basic Regulation to attribute to the GOE financial support provided from China to Jushi Egypt.

• (68) During the course of this investigation, the panel’s report in European Union – Countervailing Duties on Stainless Steel Cold-Rolled Flat Products from Indonesia (DS616) was circulated. The panel found that attributing financial contributions provided by one government (Chinese state entities) to the government of another country (Indonesia) violates the SCM Agreement. The GOE and the exporting producer claimed that the Panel’s findings validated its arguments on illegality of described attribution under the SCM Agreement and that the Commission should therefore terminate this investigation.

• (69) However, the Commission has appealed the findings of the panel described above, with no final decision yet delivered by the Dispute Settlement Body. Therefore, the panel’s findings from DS616 case do not constitute a relevant precedent at this time. At the same time, in joined cases C-269/23P and C-272/23P [^ntr25-L_202602107EN.000101-E0025] challenging the original Regulation as well as Implementing Regulation (EU) 2020/870, the Court of Justice ruled that a financial contribution given by the government of a country A to exporting entities established in country B can, in fact, be attributed to country B under certain conditions.

• (70) The Court of Justice held that under Articles 2 and 6 of the basic Regulation, a subsidy may take the form of a foreign investment, made by the government of a given third country (country A), in one or more companies established in another third country (country B), provided that the conduct of the latter country’s government permits the inference that they granted that financial contribution to those companies, by formally granting it to them or by allowing them in practice to benefit from it [^ntr26-L_202602107EN.000101-E0026]. That may be the case, in particular, where the establishment of legislation, the adoption of a decision, the grant of an authorisation or the use of any other measure by country B is necessary to enable those companies to obtain, in the territory of the country B, a financial contribution from country A, whether that need is legal or arises from the fact that country A has, in practice, made entitlement to that financial contribution subject to such legislation, decision, authorisation or other measure.

• (71) As found in the original investigation, the GOC and the GOE closely cooperated in establishing the SETC-Zone as a zone with special legal and economic features, which enabled the GOC to pursue the aims of outward expansion of its industries under the ‘Belt and Road’ initiative and ‘going out’ policies, and to confer the facilities inherent to these initiatives. Such efforts by the GOE to set up the SETC-Zone, and extensive coordination with the GOC in relation thereto, clearly amount to conduct that permits the inference that the GOE granted those financial contributions to Jushi Egypt, by allowing the company in practice to benefit from it in the framework of the described cooperation.

• (72) No new evidence was submitted in the expiry review that would invalidate any of the conclusions reached in relation thereto.

• (73) Thus, the Commission concluded on the basis of the evidence available, that financial contributions in the form of preferential financing from Chinese public bodies to Jushi Egypt can be attributed to the GOE as the government of the country of origin or export under Article 3.1 (a) of the basic Regulation [^ntr27-L_202602107EN.000101-E0027]. In this specific case, the provision of financial support by the GOC or Chinese public bodies to Jushi Egypt can therefore be attributed to the GOE.

• (74) To establish whether there was continuation of subsidisation, the Commission examined whether the subsidies countervailed in the original investigation continued to confer a benefit to the exporting producer of GFR from Egypt.

• (75) Following the disclosure, the GOE repeated its claims that attributing to the GOE any financial support provided from China to Jushi Egypt is contrary to the provisions of the SCM Agreement and the basic Regulation, as confirmed in DS616, and that the Commission failed to establish, based on positive evidence, that the GOE granted, entrusted, directed, authorized or adopted any financial contribution allegedly provided by Chinese entities.

• (76) The Commission highlighted that it has already explained in recitals (69) to (71) that the panel’s findings in DS616 do not constitute a relevant precedent since the Commission has appealed those findings. At the same time, as described in the same recitals, the Court of Justice confirmed that such attribution is possible under the basic Regulation. In addition, the Commission considers that it had brought forward positive evidence, as set out in recital (71) to (73) and in the original regulation, that financial contributions in the form of preferential financing from Chinese public bodies to Jushi Egypt can be attributed to the GOE as the government of the country of origin or export.

• (77) In the absence of new arguments to the contrary, the Commission therefore dismissed the GOE’s claims.

3.3.   Direct transfer of funds in the form of the provision of preferential loans

3.3.1.   Findings of the original investigation

• (78) The original investigation found that Jushi Egypt had been subsidised through the provision of preferential lending arrangements from Chinese policy banks, acting as public bodies within the meaning of Articles 2(b) and 3 of the basic Regulation. These loans were provided both directly to Jushi Egypt by the China Development Bank (‘CDB’) and the Export-Import Bank of China (‘EXIM’) [^ntr28-L_202602107EN.000101-E0028].

• (79) Furthermore, the Commission found that Jushi Egypt had been subsidised through the provision of preferential lending arrangements in the form of inter-company loans from its mother company, Jushi China [^ntr29-L_202602107EN.000101-E0029]. Rather than Jushi Egypt getting the loans directly from the Chinese banks, Jushi China had financed those intracompany loans via external financing from Chinese financial institutions at preferential terms and then allocated the benefit of those loans to its manufacturing activities in Egypt (Jushi Egypt).

• (80) The Commission concluded that such financing constituted a financial contribution conferring a benefit and was specific within the meaning of the basic Regulation.

3.3.2.   Continuation of subsidisation

• (81) Evidence collected during this investigation shows that the financing pattern found in the original investigation continued during the review investigation period. The exporting producer relied heavily on external financing provided by the related Chinese entities, mainly to finance its daily operations and to fund investment projects in the expansion of its production capacity.

• (82) More specifically, one part of the external financing was provided to Jushi Egypt by its parent companies in the form of long-term intracompany loans. Another part of the external financing came in the form of a range of short-term loans directly provided to the exporting producer by a privately-owned Hong Kong-based bank. In absolute terms, external financing in the form of bank loans accounted for a total amount in the same range as in the original investigation.

• (83) These intracompany loans were provided to Jushi Egypt by the Jushi Group and by its second parent company, of which the shareholding structures are described in recital (61), and these were provided, among others, to invest in the expansion of Jushi Egypt’s production capacity.

• (84) The investigation revealed that Jushi Group itself relied on external financing from Chinese financial institutions that were all found in previous anti-subsidy investigations to be state-owned financial institutions that qualify as public bodies within the meaning of Article 2(b) of the Basic Regulation read in conjunction with Article 3(1)(a)(i) of the basic Regulation and in accordance with the relevant WTO case-law [^ntr30-L_202602107EN.000101-E0030].

• (85) The presence and details of subsidy schemes and details regarding external financing at the level of the Jushi Egypt’s second parent company have not been made available to the Commission, as referred to in recital (50). Neither was this the case for the parent companies of Jushi China, CNB and CNMB Group. The exact nature, number, amount, and preferential terms of loans at the level of the parent company are not publicly available information and could therefore not be precisely determined by the Commission.

• (86) Given the above, there was no evidence to suggest that subsidisation under this scheme was discontinued. In addition, since several of Jushi Egypt’s parent companies did not cooperate, and on the grounds that money is fungible and can be transferred from one related entity to another regardless of the market where sales are taking place, the Commission concluded, based on the facts that were available to it, that Jushi Egypt continued to benefit from an intracompany financing structure that was similar to the original investigation.

• (87) The Commission therefore concluded that the subsidy scheme continued to exist and that, as in the original investigation, the parent companies had itself financed these intracompany loans via external financing from Chinese financial institutions. In other words, rather than Jushi Egypt getting the loans directly from the Chinese banks, its parent companies obtained the preferential financing from these institutions and then allocated the benefit of those loans to its manufacturing activities in Egypt (Jushi Egypt).

• (88) Furthermore, the Commission considered that the underlying preferential loans channelled through the Jushi Group and through the second parent company, which had its respective parent companies in China, are also attributable to the GOE, as set out in recital (73).

• (89) The Commission did not investigate further whether countervailable loans from policy banks directly to Jushi continued to exist. For the purpose of the current expiry review investigation, it was sufficient to demonstrate that there is continuation of subsidisation based on the preferential financing via intracompany loans, which constituted an important share of Jushi Egypt’s overall means of financing in the review investigation period.

3.3.3.   Benefit

• (90) The Commission assessed the benefit conferred on the recipients during the review investigation period. According to Article 6 (b) of the basic Regulation, the benefit conferred on the recipients is the difference between the amount of interest that the company pays on the preferential loan and the amount that the company would pay for a comparable commercial loan obtainable on the market.

• (91) As in the original investigation, the Commission analysed the loans as financial contributions from the GOC [^ntr31-L_202602107EN.000101-E0031]. In this context, as mentioned in recital (84) above, the Commission found that all State-owned Chinese financial institutions that provided loans to the Jushi Group and Jushi Egypt were public bodies.

• (92) The Commission thus compared the average interest rate that Jushi Egypt pays on the outstanding amount of the intracompany loan during the review investigation period with the amount that the parent company Jushi Group and the second parent company would have to pay for a comparable commercial loan obtainable on the market.

• (93) The company reported during the review investigation it was not assigned an individual credit rating, and that the Jushi Group was assigned a corporate credit AA+ rating by a Chinese rating entity in the investigation period of the original investigation. However, in the original investigation the Commission considered that the overall financial situation of the Jushi Group corresponded to a BB rating, which is the highest rating that no longer qualifies as ‘investment grade’, and that the use of US B (instead of BB) corporate bonds would be more appropriate to determine the market-based benchmark [^ntr32-L_202602107EN.000101-E0032]. Given that no evidence was found in the review investigation that contradicted this assessment, the Commission maintained this approach.

• (94) The Commission therefore used as the appropriate benchmark to determine the market-based interest rate of intracompany loans denominated in USD, the applicable interest rate as set by the People’s Bank of China adjusted with a mark-up. As a mark-up, the Commission used the relative spread between US AA and US B corporate bonds. For intracompany loans denominated in euro, the appropriate benchmark was considered to be below-investment grade EUR corporate bonds.

• (95) All the elements concerning the financing described above in section 3.3.2 show that Jushi Group and the second parent company allocated all the benefits from the preferential financing received from the Chinese financial institutions to Jushi Egypt. For all these reasons the calculated benefit was thus attributed to Jushi Egypt.

3.3.4.   Specificity

• (96) As described in sections 3.1 and 3.2 above, the Commission concluded that the GOE was the granting authority with respect to the preferential financing. The GOE allowed Jushi Egypt in practice to benefit from preferential financing in the framework of the described cooperation with the GOC, acknowledging and adopting the designation by the GOC of the SETC-Zone as an overseas investment territory under Article 4 of the Cooperation Agreement and endorsed the fully-fledged implementation thereof by, inter alia, the GOC’s provision of preferential financing.

• (97) Within that framework, these subsidies were limited to the companies set up in the SETC-Zone. The Commission therefore concluded that these were regional subsidies within the meaning of Article 4(3) of the basic Regulation and falling within the jurisdiction of the granting authority in accordance with Articles 4(2) through (4) of the basic Regulation.

3.3.5.   Conclusion

• (98) In light of the above considerations and given that this investigation did not bring into light any information contradicting the original findings, the Commission concluded that Jushi Egypt continued to receive countervailable subsidies in the form of preferential financing from Chinese policy banks, in line with the policy stipulated in specific plans and directives referring to the GFR industry. Those loans were provided in the form of intracompany loans from its mother companies, the Jushi Group and the second parent company.

• (99) All subsidies found were established for the total turnover of the company. The subsidy amount was then allocated to the turnover of the product concerned sold to the Union for the review investigation period.

• (100) The subsidy rate found for preferential financing through loans from Chinese policy banks via the parent companies amounted to 1,23 %.

3.4.   Direct transfer of funds in the form of support for capital investment

3.4.1.   Findings of the original investigation

• (101) The original investigation found that Jushi Egypt also benefited from countervailable subsidies in the form of grants, channelled to it by CNBM, a state-controlled entity, by way of paid-in capital injections and transfer of funds through other types of capital accounts. These funds were needed to, in addition to the direct and intracompany loans described above, cover the financial needs of Jushi Egypt’s investments [^ntr33-L_202602107EN.000101-E0033].

• (102) The original investigation found that, between 2012 and the original investigation period, Jushi Egypt’s capital increased to 162 million USD [^ntr34-L_202602107EN.000101-E0034].

3.4.2.   Legal basis

• (103) The core legal framework relevant for this scheme remained unchanged. Therefore, the Commission concluded the materially relevant legislation in the review investigation period remained the same as in the original investigation:

• — 13th Five-Year Plan for the Development of Foreign Trade, issued by MOFCOM, 26 December 2016 and succeeded by the 14th Five-Year Plan for National Economic and Social Development and Long-Range Objectives for 2035 [^ntr35-L_202602107EN.000101-E0035];

• — Guiding Opinions of the State Council on the Promotion of International Production Capacity and Equipment Manufacturing Cooperation, issued in 2015 (‘Guiding Opinions’);

• — Building Materials Industry Development Plan 2016-2020, Ministry of Industry and Information Technology, GXBG [2016] No 315;

• — The 13th Five-Year Plan for Fibre and Composite Materials Industry;

• — Made in China 2025, State Council, July 7, 2015.

3.4.3.   Continuation of subsidisation

• (104) The review investigation showed that based on Jushi Egypt’s financial accounts, the paid-in capital of Jushi Egypt appeared to remain stable between the original investigation period and the review investigation period. The available evidence demonstrated that no additional equity injections to Jushi Egypt took place over the period concerned.

• (105) The Commission also found that the capital that was initially paid in by CNBM in China was still reported in the financial accounts of Jushi Egypt. On that basis, the Commission concluded that the capital was still available to the company and that the subsidisation under this scheme continued.

3.4.4.   Benefit

• (106) In the original investigation, the Commission established the subsidisation amount for the investigation period by amortising the grant over a period of time. In doing so, the Commission decided to follow a conservative approach and used an amortisation period of 12 years, based on the assumption that the funding was used to fill the gap for the company’s investment projects in manufacturing [^ntr36-L_202602107EN.000101-E0036].

• (107) To establish the subsidisation amount for the review investigation period, the Commission applied the same methodology and amortisation period as in the original investigation. On this basis, the Commission concluded that the benefit related to the support for the capital investments that were found in the original investigation and that were not fully depreciated according to the method described in the previous recital, constituted the benefit amount that applied in the review investigation period.

3.4.5.   Specificity

• (108) The subsidy in question is specific within the meaning of Article 4(2)(c) of the basic Regulation taking into account that its availability is restricted to certain companies in Egypt established within the SCZone, and for the reasons set out in recitals (14) to (15) of this Regulation.

3.4.6.   Comments on disclosure

• (109) In its comments on the disclosure, in line with its comments already described in recital (9), the GOE repeated the claim that no financial contributions were demonstrated to have been provided to the Egyptian exporting producers by Egyptian public bodies or by private entities entrusted or directed by the GOE.

• (110) As no new arguments or evidence were presented to invalidate any of the conclusions reached in Sections 3.3 and 3.4 above, the Commission dismissed these claims.

3.4.7.   Conclusion

• (111) In light of the above and in absence of any evidence to the contrary, the Commission concluded that during the review investigation period Jushi Egypt continued to benefit from paid-in capital injections and transfers of funds through other types of capital accounts just as in the original investigation.

• (112) Therefore, in light of the above considerations, the Commission concluded that Jushi Egypt continued to benefit from countervailable subsidies in the form of the support for capital investments.

• (113) All subsidies found were established for the total turnover of the company. The subsidy amount was then allocated to the turnover of the product concerned sold to the Union.

• (114) The subsidy rate found for direct transfer of funds in the form of support for capital investment amounted to 0,44 %.

3.5.   Government revenue forgone or not collected that is otherwise due in the form of Value Added Tax (‘VAT’) exemptions and import tariff rebates for the use of imported equipment

3.5.1.   Findings of the original investigation

• (115) The original investigation found that Jushi Egypt benefitted from an exemption from VAT and import tariffs for imports of equipment used in the production process of the companies located in the SCZone [^ntr37-L_202602107EN.000101-E0037].

• (116) The original investigation found that, according to Article 22 of Law 83/2002, as amended by Law No. 27/2015 Amending some Provisions of Law of Economic Zone of Special Nature issued by Law No. 83/2002 (‘Law 27/2015’), the SCZone is part of a separate customs area in Egypt. According to Article 42 of Law 83/2002, imported equipment, tools, or apparatus shall be exempted from import taxes and duties as long as they are allocated to produced goods or services for the licensed activity within the SCZone.

• (117) As concerns VAT treatment, the original investigation found that companies located outside of the SCZone pay import VAT upfront and net it against the VAT on their domestic sales or, if applicable, apply for a refund when finished goods are exported. For companies located in the SCZone, VAT is withheld and is thus initially not charged. Tax authorities only retained a right to reclaim VAT afterwards.

• (118) The original investigation found that companies located in mainland Egypt (outside the SCZone) that buy machines subject to the applicable VAT rate should utilize the amounts of VAT they pay as a credit against future payments. However, where the credit balance is retained for more than 6 consecutive tax periods (months), which will be the case for companies heavily engaging in exports which thus cannot offset input VAT as a credit against future payments, the registered person shall apply for a refund of the outstanding balance. The Egyptian Tax Authority should check the correctness of the balance and refund within 45 days of the date of submitting the application.

• (119) Against this background, in the original investigation the Commission considered that the amount of import taxes and duties which companies in SCZone are exempted from constituted a countervailable financial contribution. The reason being that any equipment used in the manufacturing of products, including the product under review, will in all likelihood be used for its entire useful life within the Egyptian territory without being re-exported or sold domestically. There is therefore no rationale for granting an exemption from taxes or duties on import of such equipment, other than benefiting the companies located in the SCZone. This therefore constitutes revenue forgone in the amounts of import taxes and duties not collected on import of such equipment. In order to ensure that the countervailable amount only covered the investigation period the benefit received was amortized over the useful life of the equipment.

• (120) As concerns VAT treatment of machinery imported for production in the SCZone, in the original investigation the Commission considered withheld VAT as benefit only insofar as withholding it had a positive impact on the cash flow of a company in SCZone, as opposed to companies in the rest of Egypt, which would have to pay the VAT upfront [^ntr38-L_202602107EN.000101-E0038]. As a result, the cash flow benefit on the VAT withheld was considered to be equivalent to the average interest rate on deposits in Egypt during the original investigation period, applied to the VAT amounts which were withheld for goods purchased since 2017.

• (121) The Commission therefore examined whether this legal framework was still in place and if Jushi Egypt continued to benefit from this scheme in the review investigation period.

3.5.2.   Legal basis

• (122) The core legal framework relevant for this scheme remained unchanged, although customs procedural framework has been modernised. New Customs Law No. 207 was enacted in 2020 (‘Law 207/2020’), replacing the old Law No. 66 of 1963. The new Law 207/2020, which applies nationally, unified customs procedures (including those for special economic zones) and consolidated tax exemptions that were scattered under different laws. The GOE highlighted, however, that the Law 207/2020 did not alter the specific customs duty regime that applies in the SCZone.

• (123) Therefore, the Commission concluded the materially relevant legislation in the review investigation period remained the same as in the original investigation:

• — Law 83/2002 on Economic Zones of a Special Nature (‘Law 83/2002’),

• — Decree of the President of the Arab Republic of Egypt on Law No 27/2015 Amending some Provisions of Law of Economic Zone of Special Nature issued by Law No 83/2002 (‘Law 27/2015’),

• — Investment Law No. 72 of 2017 (‘Law 72/2017’),

• — The Prime Minister's Draft Resolution No. (2310) of 2017 Concerning issuing the Executive Regulations of Investment Law Issued by virtue of Law No. 72 of 2017,

• — Value Added Tax Law No. (67) of 2016 (‘Law 67/2016’) and

• — Executive Regulations of the VAT Law, Decree of the Ministry of Finance No. 66/2017.

3.5.3.   Continuation of subsidisation

• (124) The rules governing the exemption from import taxes and duties of machinery imported into SCZone, as well as its special VAT treatment, compared to the rest of Egypt, as described in recitals (115) to (120) above thus remained unchanged from the original investigation.

• (125) Evidence collected during this review investigation showed that Jushi Egypt continued to import substantial volumes of new equipment in the period between the end of the original investigation and the end of the review investigation period. Both the company and the GOE confirmed that companies that operate in the SCZone, which includes Jushi Egypt, continued to benefit from import duty rebates and VAT exemptions on equipment that was imported into the SCZone in the same manner as in the original investigation and without having to pay a deposit.

• (126) Furthermore, to calculate the subsidy amount under this scheme in the original investigation period, the Commission amortized the benefit received over the useful life of the equipment that Jushi Egypt imported. Most of the equipment on which these calculations were based in the original investigation was still being depreciated in the review investigation period. Therefore, as a mathematical necessity, the exporting producer continued to receive benefit under this scheme concerning that equipment also in the review investigation period.

• (127) As the legal framework has not changed from the original investigation and based on the evidence collected in the current investigation, the Commission concluded that the company benefitted from this scheme with regard to that equipment in the same way as in the original investigation.

3.5.4.   Specificity

• (128) As established both in the original and current investigations, Article 42 of Law 83/2002 specifically provides for an exemption of import duties on equipment, tools, or apparatus insofar they are allocated to produced goods or services for the licensed activity within the SCZone. This exemption is not applicable for importation of equipment into the rest of Egypt.

• (129) As concerns the special VAT treatment, as was explained in recitals (120) and (122) above, just as in the original investigation, the Commission considered that the fact that VAT on equipment imported into the SCZone could be withheld resulted in a positive impact on a cash flow of a company in SCZone, as opposed to companies in the rest of Egypt which would have to pay the VAT upfront. The Commission therefore found no reason to change its conclusions.

• (130) The Commission thus concluded that this subsidy continued to be specific within the meaning of Article 4(2)(a) of the basic Regulation, as it is not generally applicable in Egypt, and applies only to the companies located in Economic Zones of a Special Nature, such as the SCZone.

3.5.5.   Benefit

• (131) The amount of this countervailable subsidy is calculated in terms of the benefit conferred on the recipient, which was found to exist during review the investigation period. The benefit conferred on the recipient is considered to be:

• (a) The amount of customs duties exempted on the imported equipment that was purchased by the company, and was in use and not yet fully depreciated in the review investigation period. To ensure that the countervailable amount only covered the review investigation period, the benefit received was amortized over the useful life of the equipment according to the company’s normal accounting procedures, except for one of the asset categories, where the amortization period was adapted to better reflect the actual useful life, as verified by the Commission services; and

• (b) The cash flow advantage to the exporting producers on VAT exemptions regarding imported equipment that was purchased by the company and was in use and not yet fully depreciated in the review investigation period. To ensure that the countervailable amount of the VAT exemption only covered the review investigation period, the amount was amortized as described in the previous indent. Subsequently, the cash flow benefit conferred on the recipient was considered to be equal to the average interest rate on deposits in Egypt during the review investigation period (19,2 %) [^ntr39-L_202602107EN.000101-E0039], applied to the withheld VAT amounts that were applicable in the review investigation period.

3.5.6.   Conclusion

• (132) In light of the above considerations, and absent any argument to the contrary, the Commission concluded that the GFR producer in Egypt continued to benefit from this scheme. In view of the existence of a financial contribution, a benefit conferred and specificity, this subsidy programme continues to be considered countervailable.

• (133) The subsidy rate established, as per recital (99), with regard to this type of subsidies regarding imported equipment was 0,08 % for VAT exemptions and 0,35 % for import tariff rebates.

3.6.   Government revenue forgone or not collected that is otherwise due in the form of VAT exemptions and import tariff waivers for imported input materials used in exported finished goods

3.6.1.   Findings of the original investigation

• (134) In the original investigation, the Commission found that companies operating in a special economic zone, such as the SCZone where Jushi Egypt is located, benefitted from VAT exemptions and import tariff waivers for imported input materials [^ntr40-L_202602107EN.000101-E0040].

• (135) According to article 42 of Law 83/2002, imported raw materials, supplies, spare parts, and any other material or components imported from overseas shall be exempted from payment of taxes and duties insofar they are allocated to produced goods or services for the licensed activity within the SCZone. On the other hand, all taxes and duties need to be paid for any products released into the domestic market outside of the SCZone. However, considering that the SCZone is part of a separate customs area, as mentioned in recital (116) above, all taxes and duties need to be paid for any products released into the domestic Egyptian market outside of the SCZone.

• (136) In the original investigation the Commission found that, in line with the provisions of the Law 83/2002, the exporting producer had received waivers for import duties on input materials used in the production of the exported product concerned. Such a setup corresponds to a duty drawback scheme as described in Annex I(i) of the basic Regulation. Pursuant to point (i) of Annex I, substitution drawback systems can constitute an export subsidy to the extent that they result in an excess drawback of the import charges levied initially on the imported inputs for which drawback is being claimed.

• (137) The Commission concluded in the original investigation that a duty drawback monitoring system, which could verify that no excess drawback of the import charges was taking place, had not been effectively applied during the original investigation period. The Commission therefore considered this duty drawback scheme countervailable.

• (138) The VAT treatment of imported materials was found to be the same as for imported machinery described in section 3.5 above: VAT on imported goods was withheld instead of being paid upfront in the SCZone, which resulted in a positive impact on the cash flow of a company in the SCZone as opposed to companies in the rest of Egypt. Tax authorities only retain a right to reclaim VAT afterwards.

• (139) In this investigation the Commission thus sought to examine whether a reliable verification system to check that no excess drawback of the import charges was taking place existed during the review investigation period, whether the legal framework governing VAT exemptions on imported materials remained in place, and whether Jushi Egypt continued to benefit from this scheme in the review investigation period.

3.6.2.   Legal basis

• (140) Just as was the case regarding the importation of equipment into the SCZone, as explained in recitals (122) and (123) above, the legal framework relevant for this scheme remained unchanged. However, the customs procedural framework has been modernised since the original investigation with the introduction of the new customs Law 207/2020 and relevant by-laws, which initiated novelties into the functioning of customs procedures.

• (141) Therefore, the Commission concluded that the legislation relevant for the examination of this scheme in the review investigation period was:

• — Decree of the Chairman of Customs Authority No. 34 of 2020 (‘Decree 34/2020’) on establishing a dedicated Committee to oversee goods entering and leaving the SCZone (the ‘SCZone Customs Committee’);

• — Law No 83/2002 on Economic Zones of a Special Nature (‘Law 83/2002);

• — Decree of the President of the Arab Republic of Egypt on Law No 27/2015 Amending some Provisions of Law of Economic Zone of Special Nature issued by Law No 83/2002 (‘Law 27/2015);

• — Investment Law as Enacted by Law No 72 of 2017;

• — The Prime Minister's Draft Resolution No. (2310) of 2017 Concerning issuing the Executive Regulations of Investment Law Issued by virtue of Law No. 72 of 2017;

• — VAT Law as Enacted by Law No 67 of 2016;

• — Executive Regulations of the VAT Law, Decree of the Ministry of Finance No. 66/2017; and

• — Customs Law 207/2020 (as referred to in recital (122) ).

3.6.3.   Continuation of subsidisation

• (142) The rules on the exemption from import taxes and duties of materials imported into SCZone, as well as its special VAT treatment compared to the rest of Egypt, described in recital (138) above, as governed by the Law 83/2002 and other material legislation specifically relating to special economic zones such as the SCZone, thus remained unchanged from the original investigation.

• (143) Evidence collected during this review investigation shows that Jushi Egypt continued to import nearly all its input materials in the review investigation period from countries outside Egypt. It also showed that in the same period a share of the product under review produced by Jushi Egypt was sold on the domestic market in Egypt.

• (144) Concerning the collection of taxes and duties on imported input materials, both the GOE and Jushi Egypt confirmed that the payment of customs duties on the importation of those materials into the SCZone is suspended, since the SCZone is considered a separate customs area, and that companies located in the SCZone are exempted from paying VAT on those purchases. Instead, as described in recital (135), only if the final products are subsequently imported into Egypt, the import duties and VAT on raw materials are paid by the customer in Egypt, based on the value of the imported products.

• (145) In its questionnaire reply and subsequent exchanges with the Commission, the GOE explained that the new customs Law 207/2020 unified customs procedures, including those for special economic zones.

• (146) The main change as compared to the original investigation period was the procedural modernisation, specifically the introduction and mandatory implementation of the Advanced Cargo Information (‘ACI’) system through the IT platform/interface called ‘Nafeza’ [^ntr41-L_202602107EN.000101-E0041], which digitises the tax collection and assessment process. In addition, the Nafeza system automatically calculates duties and VAT on imported inputs. The GOE explained that the General Authority for the SCZone has access to specific modules of this system, relevant to approve permits and monitor stocks for companies in the SCZone, ensuring integration between the SCZone's approvals and Customs Authority's clearances.

• (147) The GOE and the company also explained that the General Authority of the SCZone and the Customs Authority monitor the destination of finished products from the SCZone with the help of ‘destination certificates’. Producers in the SCZone need to submit such certificates both for sales of finished products into the domestic market in Egypt and for exports. The Customs Authority calculates the proportion of domestic sales out of all sales recorded for a given producer and determines the tax burden on imported inputs on that basis. The GOE explained that Customs Authorities keep company-specific files for these calculations.

• (148) In addition, considering that the SCZone is a separate customs area in Egypt, a dedicated SCZone Customs Committee was established by the Decree 34/2020, to monitor inputs imported into and products exported out of the SCZone. The GOE claimed that with the new IT infrastructure, the General Authority can track the inventory of companies within the SCZone in real time. Production formulations of final products provided by the producers are relied on to determine the amount of import duties that need to be paid on imports of inputs when the downstream product is sold into the Egyptian market.

• (149) Finally, the GOE also claimed that post-clearance audits are undertaken to verify that what was declared at the time of customs clearance or exportation corresponds to what is actually recorded in the companies’ accounts and records. However, such audits did not take place at Jushi Egypt during the review investigation period.

• (150) The legal and procedural framework for a duty drawback monitoring system thus seemed to be in place. The Commission was, however, unable to verify whether it effectively operated in practice.