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The International Practice of the European Communities: Current Survey1.2. Administrative Determinations Commercial Defence Actions and Other International Trade Developments in the European Communities: 1 January 1993 - 30 June 1993 Edwin Vermulst1and Folkert Graafsma2 Full text available: PDF format * This is the sixth in the series of reports on developments in the field
of EC international trade law.3 This report
will cover developments that occurred during the six-months period
1 January 1993 to 31 July 1993. 1. Dumping1.1. General DevelopmentsMarket economies - State traders As from 1 May 1993, Romania and Bulgaria are also considered as market
economies for anti-dumping purposes.4 This
brings the number of countries that are presently considered as
state-controlled for the purposes of application of EC anti-dumping law to
sixteen:5 Mongolia, North Korea, PRC,
Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzkstan, Moldova,
Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan and Vietnam.6 Reportedly, Mr. Yeltsin is also trying to have
Russia recognized as a market economy,7 and
thus the political pressure to have it so regarded will increase in the near
future. 1.2. Administrative DeterminationsDRAMs from Korea, OJ (1993) L 9/1 (extension
provisional) Definitive anti-dumping duties were published in the Official Journal on
15 January 1993. Of the Korean companies involved Cheil Foods was exempted from
the duty. The other Korean companies obtained duties of less than 5%. Of the
Indian companies, JCT was exempted from the duty. Reliance, the largest company
in India, obtained a 2.1% duty. The duties of the other five companies varied
between 2 and 7.2%. An important issue in the case was the sale of so-called B-grade
products on the Korean market. B-grade sales are sales of substandard products
and the Korean producer concerned in his cost accounting records had valued
these on the basis of the net realizable value, a generally accepted accounting
principle in Korea. B-grade sales are really sales of reject products and as
such the Korean producer did not keep cost accounting records for this product
(indeed, what is the production cost of a production reject?). The Commission
rejected the cost accounting method of the Korean producer and instead employed
the costs of manufacture and selling, general and administrative expenses of
other standard types of polyester staple fibers sold on the domestic market,
plus a profit rate based on the average profit achieved on domestic PSF sales
as a normal value. Needless to say this method inflated the normal value for
the substandard product. The Commission imposed anti-dumping duties of 11.3% and 6% on Koyo Seiko
and NTN Corporation respectively. These duties were based on the dumping
margins found. In the construction of the export price the Commission used a
profit margin of 6%. As regards the like product, the Commission made a
distinction between unfinished tapered roller bearing cups and finished tapered
roller bearing cups and excluded unfinished tapered roller bearing cups from
the scope of the proceeding. Because of the large number of Taiwanese producers involved, the
Commission decided to resort to sampling. In agreement with the relevant
Taiwanese trade association, eight companies were selected for a complete
investigation. The eight companies represented 49% of all Taiwanese bicycle
exports to the Community during the investigation period. With respect to China
a sample was also taken, and in view of the fact that there were two types of
Chinese producers, i.e. state-owned organizations and joint ventures (companies
with non-Chinese participation), the sample chosen for China consisted of two
state-owned organizations and two joint venture companies. A fifth exporter
selling bicycles produced in China and exported via Hong Kong was also included
in the sample. With respect to the like product, the Commission acknowledged that there
are really five types of bicycles i.e. mountain bicycles, sport/racing
bicycles, touring bicycles, junior action bicycles and other bicycles. However
as there was no clear dividing line between the different types, the Commission
decided that the whole range of models had to be considered as forming one like
product. As far as normal value for Taiwan was concerned, the Commission decided
to use constructed values even though six of the sampled companies had sold
sufficient quantities of bicycles in a domestic market, in view of the large
number of discrepancies and variations in models. With respect to China, Taiwan
was used as an analogue country. Where export prices were constructed a profit
margin of 5% was used. An OEM claim made by several Taiwanese producers was
rejected by the Commission on the grounds that prices, costs and profits for
OEM sales on the Taiwanese market were found to be comparable to those for own
brand sales. The weighted average dumping margin calculated for all Taiwanese
companies amounted to 1.05%. The Commission considered this to be de
minimis and refrained from imposing dumping duties on Taiwan. This approach is inconsistent with previous cases such as video
tapes where the Commission had actually applied de minimis
provisional anti-dumping duties on the grounds that the calculations as
such were still provisional and might still be subject to change at the
definitive stage. With respect to China, the Commission applied the
one-country-one-duty rule. The Commission stated that none of the companies
involved had been able to demonstrate to the satisfaction of the Commission
that it enjoyed, and could be expected to continue to enjoy, the necessary
degree of commercial autonomy to be granted individual treatment. The dumping
margin found for China was 34.4% and duties were imposed at the same level as
the undercutting margin was higher than the dumping margin. Finally the claim by some of the state-owned Chinese companies that
their exports to the EEC should be decumulated from other exports was rejected
by the Commission. It is indeed consistent Commission practice to reject claims
for intra-country decumulation. The case was initiated on 10 March. The targeted products are: `large electrical capacitors, non solid, aluminium electrolytic, with a CV product (capacitance multiplied by rated voltage) between 8,000 and 550,000 C (micro-Coulombs) at a voltage of 160 V or more'. It is alleged that the targeted products fall within CN Code ex 8532 2200. This differs from the scope of the Japanese capacitors proceeding
where: `large electrical capacitors, aluminium electrolytic, with a CV product (capacitance multiplied by rated voltage) between 18 000 and 310 000 C (micro-coulombs) at a voltage of 160 V or more and with a diameter of 19 mm or more and a length of 20 mm or more ... and falling within CN code ex 8532 22 00' were the targeted products. The scope of the new capacitors case is therefore slightly larger
because the `CV product' is more extensive and the product is not limited by a
particular dimension. On the other hand the new capacitors case only covers
`non-solid' capacitors as opposed to the Japanese case that did not have this
restriction. The proceeding targets television camera systems. These systems consist
of: a camera head with three sensors (12 millimetre or more charge-coupled
device pick-up devices) with more than 400,000 pixels each, which can be
connected to a rear adaptor, and having a specification of the signal to noise
ratio of 55 dB or more at normal gain; either in one piece, with the camera
head and the adaptor in one housing or separated; a view finder (diagonal of 38
mm or more); a base station or camera control unit (CCU) connected to the
camera by a cable; an operational control panel (OCP) for camera control (i.e.
for colour adjustment, lens opening or iris) of single cameras; a master
control panel (MCP) or master set-up unit (MSU) with selected camera
indication, for the overview and for the adjustment of several remote cameras.
The parts are imported together or separately. These different components of a television camera system do not function
separately and cannot be used outside the camera system of a particular
producer. Lenses, video tape recorders and camera heads with a recording unit in
the same housing are not covered by the complaint. It is alleged that the professional TV cameras fall within the following
CN codes: - ex 8525 30 99 The complaint was lodged by the Committee for Appropriate Measures to
Establish Remedial Anti-dumping [Camera]. The main complainant is Philips. The Regulation imposing definitive duties and the Commission decision
accepting undertakings were published on 18 March. The dumping margins for the three cooperating producers were: 14.6% for
Samsung and in excess of 50% for Goldstar and Hyundai. The residual duty was
set at 24.7% (the highest level of undercutting). Undertakings were accepted from all three cooperating companies. A particular aspect of the case was that provisional duties were
collected for four months only. This unique feature of the case merits
reproduction in toto: With respect to provisional duties, it is Community practice to collect these duties definitively if substantial injurious dumping provisionally determined is confirmed at the definitive stage and if the situation with respect to the injurious effect of the dumped imports to the Community market has not fundamentally changed since the imposition of the provisional duties. In the present case, substantial injurious dumping was definitively confirmed. However, due to the specific aspects of the situation, in particular the fact that after acceptable undertakings had been offered by all three Korean producers which cover the entirety of imports originating in Korea, it was considered that the interests of the Community did not require the collection of these duties for their full period of validity but only for the initial period of validity of four months. This is one of the very rare proceedings where the provisional duties
were not (totally) collected after the acceptance of undertakings.8 On virtually all others issues, which were already discussed in our
previous report9 the Council upheld the
Commission's findings. This was a newcomer review request. This review was initiated by the Commission itself. The reasons were an
increase in exports from these countries and a decrease of the Community
market. This case was characterized by a high degree of non-cooperation. As a
result the Commission had to use best information available, i.e. trade
statistics of the EC, certain information given by interested parties and
information supplied by the sole Community producer. South Africa was used as a
surrogate country for the three Russian Republics. A fixed anti-dumping duty of
ECU 0.276 per kg net was imposed. The sole Community producer argues that the United States should be used
as a surrogate for China. The proceeding had been initiated in July 1991 as a result of a
complaint filed by the Committee of European Diskette Manufacturers (Diskma) on
behalf of the major proportion of EC producers of 3.5" microdisks. The investigation period ran from 1 April 1990 to 31 March 1991. The products covered were: 3.5" microdisks used to record and store encoded digital computer information falling within CN code ex 8523 20 90 (Taric code: 8523 20 90*10), and originating in Japan, Taiwan and the People's Republic of China. The microdisks are available in various types, depending on their
storage capacity and on the way in which they are marketed. However, the
Commission determined that between the various types no significant differences
in the basic physical characteristics and technologies exist. Therefore, for
the purpose of this proceeding all 3.5" microdisks should be considered as one
product. In order to examine whether the complainants constituted a major
proportion of the total Community production of the like product, the
Commission requested the cooperation of all known non-complainant producers in
the EC and took into account the information by the non-complaining cooperating
producers. Further, the producers that were related to producers in the
exporting countries were excluded from the EC industry. On this basis, the
complainant EC microdisks producers represented approximately 77% of the total
EC production during the investigation period. The dumping margins found and the duties imposed, expressed as a
percentage of the total CIF value, were as follows:
The duties for Japan were limited by the injury margin. For Taiwan and
China the duties were limited by the dumping margin. The proceeding lasted 21 months from the initiation (July 1991) to the
imposition of provisional duties (April 1993). The Commission stated at recital
(6) that: the investigation has exceeded the normal time period of one year because of the volume and complexity of the data gathered and examined. This means that once the definitive duties are imposed, 27 months will
have lapsed since the notice of initiation. The UK has voted against the imposition of provisional duties on the
ground that it is a consumer of floppy disks and has no production facilities.
Obviously, duties will mean more expensive disks for British consumers. The Commission decided again to apply the one-country-one-duty rule for
China. However it made an exception for one company. This company was fully
owned by a foreign investor and the Commission found, on the basis of its
articles of association and other relevant documents concerning the
establishment and functioning of the company that, in addition to being profit
oriented with the freedom to transfer profits outside the People's Republic of
China, it was totally independent in the administration of its business and in
the setting of export prices. For Japan a constructed value was used with a 15% profit margin. Where
export prices were constructed, a profit margin of 5% was used. Finally it may
be noted that the Commission decided to exclude so-called fall-out microdisks,
i.e. production rejects. This may be contrasted with the situation in polyester
staple fibers quoted above where the Commission decided to include
production rejects. This Regulation was the result of a review. This review had been
requested by the Community producers under Article 15 (sunset review) and
Article 14 (normal review). The investigation period ran from 1 January to 31 December 1990. The products covered were: Electronic weighing retail trade scales falling within CN code 8423 81 50 (Taric code 8423 81 50*10) and originating in Japan. The scales are available in three types: one for the low-range segment;
one for the mid-range segment; and one for the top range segment. Nevertheless
the Commission determined that although the potential use and quality of the
scales may vary, there is no significant difference in the basic physical
characteristics and marketing methods. In addition, it stated there are no
clear dividing lines as models in neighbouring segments are often
interchangeable. The Commission therefore considered the scales for the purpose
of the proceeding as one product. The Japanese producers that cooperated were: - Ishida Scales, Kyoto The investigation that started in February 1991 exceeded the normal
period `because of the volume and complexity of the data which had to be
gathered'. (26 months!) Quaere what is complex about an investigation
involving only one country and four producers! The dumping margins found exceeded 60% in all cases, except for Yamato
Scales, for which the margin was 15.3%. The duties were as follows: Tokyo Electric Co. 22.5%; Teraoka Seiko
22.6%; Ishida Scales 31.6%; and Yamato Scales 15.3%. Clearly, the duties have -
except for Yamato - been limited by the injury margin. The residual duty was
set at 31.6%, the highest injury margin found. With respect to substantive issues, the Commission accepted a selective
normal value for one Japanese producer. Trade-in rebates were again rejected
following earlier rejection in the Photocopiers proceeding. The Regulation was the result of the proceeding against weighing scales
from Singapore that started in January 1992 and that was extended to include
Korean weighing scales in April 1992. The investigation period ran from 1 January to 31 December 1991, which
was one year later than the investigation period used in the review proceeding
concerning weighing scales from Japan. The products covered were: electronic weighing scales for use in retail trade which incorporate a digital display of the weight, unit price and price to be paid, whether or not including a means of printing this data falling within CN code 8423 81 50 (Taric code: 8423 81 50*10) and originating in the Republic of Korea and Singapore. Dumping Korea Where the export sales were made to related importers, the export prices
were constructed with a 5% profit margin. The normal value was based on the weighted average domestic selling
price. Two Korean exporters made a level of trade argument, i.e. they claimed
that normal value should be established selectively on the basis of the
weighted average prices of their sales to a particular category of customer.
The exporters claimed that the dealers would be at the most comparative level
of trade for comparison with their export sales. The Commission rejected the argument because the producers failed to
establish adequately a consistency of quantities, costs and prices at one
distribution level in relation to other levels. The Commission even determined
that: [i]n fact the evidence provided on some of these factors for the specific category of customer in question showed that they were similar to a significant degree to other categories alleged to be different. As a result, the normal value was determined on the basis of all sales
to independent customers. Normal value was compared with the export prices on a
transaction-by-transaction basis. The dumping margins were as follows:
Approximately 85% of the Korean producers did not cooperate. These
producers were subject to the residual dumping margin, which was set at 29.0%,
the highest dumping margin found. The sole cooperating producer in Singapore was: - Teraoka Weigh-System PTE, Singapore Dumping Singapore The dumping margin found for this producer was 8.5%. The residual
dumping margin for Singapore `was calculated to amount to 31%'. Injury For the injury determination the Commission cumulated the imports of
Singapore and Korea. From the exporters' side, the Commission established that
the market share of Singapore and Korea had risen from 2.3 to 10.3 per cent.
The price undercutting exceeded 20 per cent and in one case even 30 per cent.
For the Community industry the production and the utilization rate had fallen
significantly. Also the market share and the prices of the Community industry
had decreased. Further, the profit of the Community industry had gone down and
the employment had declined. In view of these facts the Commission established
that there was material injury. It was argued by one of the exporters that the injury was also caused by
other factors, notably the imports from other countries such as Japan, Turkey
and Taiwan. The Commission found however that: (1) there had not been imports
from Turkey during the investigation period; (2) the imports from Taiwan did
not concern a sufficiently alike product; and (3) the dumped imports from Japan
did not preclude that the imports from Korea and Singapore had a substantial
influence on the injurious situation of the Community industry. Therefore,
concerning the causality, the Commission determined that the dumped imports
were the cause of the injury. Duties The injury margins exceeded the dumping margins in all cases.
Accordingly, the duties were limited by the (above-mentioned) dumping margins.
The residual duties for both countries were set at the highest dumping margin
found. This was a newcomer review request. The Commission accepted undertakings from a variety of exporters
concerned. Surprisingly, although the Commission decision accepting
undertakings was published only on 15 May 1993, it applies to all shipments
released for free circulation in the Community as from 1 January 1993. Residual
duties of 21.7%, 10.8% and 17.4% were imposed on Hungary, Poland and Croatia
respectively. No residual duties were imposed on the Czech and Slovak
Republics. This case was essentially terminated without protective action on the
basis of the best information available rule. The reason was that during the
injury investigation the Commission received information concerning only a
small proportion of the total Community production. The Commission resorted to sampling as regards the Community
industry. This concerned a change in a trade name of a foreign exporter. This review was initiated at the request of three Mexican
producers/exporters. The Mexican producers argue that there is no longer
material injury caused by imports from Mexico. The Commission used Turkey as a surrogate country and a specific
anti-dumping duty of ECU 112 per tonne was imposed on the Chinese exports. With
respect to the calculation of the dumping margin, the Commission made special
adjustments to allow for beneficiation and sorting processes found in Turkey
but not found in China. The Commission made an additional allowance for the
ease of access to raw materials in China as compared to that of Turkey. On the
other hand, the Commission refused to make a further allowance for the claimed
proximity of the open case mines to the kilns in China. The Commission recalled
that only differences which stem from the different natural advantages of the
product in China and in Turkey can justify adjustments to be made to the normal
value based on the situation in Turkey. The location of kilns however was not
considered a natural advantage but rather a result of commercial decisions made
by the production organization concerned. The Commission granted a partial refund of 16.9% (32% previous dumping
margin minus 15.1% dumping margin calculated for Accuphase). This review was initiated by the Commission itself on the basis of
information concerning changed circumstances in the Russian Republics as a
result of the decentralization from the former Soviet Union. The Commission had
further received conflicting data on the appropriateness of the anti-dumping
measures in the form of a variable duty. The Article 15 review proceeding has resulted in a termination of the
measures that were in force against Japan. The termination is based on the conclusion by the Commission that any
injury to the EC industry is not attributable to dumped imports from Japan, but
to its own restructuring. This case resulted from a newcomer review request made by three Chinese
producers. The Commission determined that all three companies were
state-controlled to such an extent that application of an individual dumping
margin would not be warranted. As a result the requests were rejected.
Consequently, the residual duty will continue to apply to these companies. 1.3. Court CasesCase C-136/91, Findling v. Hauptzollamt Karlsruhe, Judgment of 1 April 1993, not yet reported Council Regulation (EEC) No 374/87 of 5 February 1987 imposed definitive
anti-dumping duties on housed bearing units (ball bearing housings) from
Japan.10 Article 1 (3) of the Regulation sets forth the various rates of duty by
means of an overview table that distinguishes 8 possible situations of
production and export of Japanese ball bearing housings. These eight situations
consist of seven individual duties for individual exporters and producers, and
one remaining category: `other' (residual duty). A situation arose whereby ball bearing housings produced by Asahi were
exported by Nachi, a situation that was indeed envisaged in the overview
table of the Regulation. However, these exports took place indirectly,
through Gloria and Ehara, two trading houses in Japan, a situation that was not
(explicitly) envisaged in the overview table. The German Customs Authorities
considered that this type of export should be classified as `other' and
accordingly imposed the residual duty of 13.39 per cent. The Commission
supported the Customs Authorities' literal reading and argued that to do
otherwise would be harmful to legal certainty and a uniform interpretation of
EC customs legislation. The importer, Findling, considered that this was an
individual situation as foreseen by the table contained in the Regulation and
argued that the imports should be subject to an individual 2.24 per cent duty
and that the customs' interpretation of Article 1 (3) was incorrect. Therefore,
the importer challenged the decision of German Customs Authorities in court.
The German court considered that a literal reading of the Article meant
that the situation had to be classified under `other'. However, the German
court questioned whether the purpose of the Regulation was not different and
that therefore under a `teleological' interpretation the outcome would be
different. Accordingly, the German court referred the case to the European
Court of Justice [ECJ] for a preliminary ruling on the interpretation of the
table contained in the Regulation and an interpretation of the notion of
`exporter'. The ECJ considered that, according to its consistent jurisprudence, a
reading of EC legislation should not only be literal, but should also consist
of interpretation in context. The ECJ then referred to the obligation laid down
in the basic Regulation and the Anti-Dumping Code not to impose duties higher
than the injury margin. The ECJ states that this obligation is neglected in
cases where a higher duty is imposed on product A exported by company B (the
exporter), rather than when company A (the producer) would have exported
product A itself. If in the latter situation a lower duty is sufficient to
remove the injury, then a higher duty in the former case is out of proportion
with the targeted aim of removing the injury. The ECJ neglects the fact that
injury margins did not play a role in this case (see for criticism below). The ECJ stressed that this teleological interpretation of Article 1 (3)
is not contrary to a uniform interpretation of EC customs legislation. The ECJ
added that a uniform interpretation of EC customs law should be ensured by a
clear and precise formulation of the Article in question. The ECJ therefore concluded that the table contained in the Regulation
should be interpreted so `that it is sufficient for the individual duties to be
applied to the ball bearing housings when they are manufactured by, or for, the
individually identified exporters'. 1. The outcome of the Judgment is satisfactory from a logical
point of view. The reasoning used to come to this result is less
satisfactory. The reasoning of the Court is partly based on the obligation to
impose duties not higher than the injury margin [lesser duty rule].
However, the duties in this case had not been limited by the injury margin but
by the dumping margin. The Court's reasoning therefore makes no sense.
2. The Judgment misses an opportunity to provide more clarity on the
notion of `exporter' under EC anti-dumping law.
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