Commission Regulation (EC) No 18/98 of 7 January 1998 imposing a provisional anti-dumping duty on imports of synthetic fibre ropes originating in India
L 4/28 ‹ EN ‹ Official Journal of the European Communities 8. 1. 98 COMMISSION REGULATION (EC) No 18/98 of 7 January 1998 imposing a provisional anti-dumping duty on imports of synthetic fibre ropes originating in India THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports the European Com- from countries not members of munity (1), (EC) by No 2331/96 (2), and in particular Article 7 thereof, Regulation amended as After consulting the Advisory Committee, Whereas: A. PROCEDURE (1) to available injurious impact of In June 1997, an anti-dumping proceeding con- cerning imports of synthetic fibre ropes originating in India was terminated without imposition of measures on the grounds that although some factors appeared to indicate the existence of injury, the overall degree of the dumped imports was not sufficiently established to justify the imposition of measures in the light of in relation to the the information available information made investigation period. However, subsequently the Commission contained sufficient prima facie evidence that the the Community industry may have situation of continued further deteriorated as dumped imports In these special from India. circumstances, and given that the new information could not be taken into consideration within the context of the Commission decided to initiate a new anti- dumping proceeding on the basis of Article 5 (6) of Regulation (EC) No 384/96 (hereinafter referred to as the ‘Basic Regulation’). The initiation of this proceeding was announced by a notice published in the Official Journal of the European Communi- ties(3) in July 1997. the abovementioned proceeding, result of a (2) The Commission officially advised the producers exporters and importers known to be concerned and the representatives of the exporting country, about the initiation of the proceeding. Interested (1) OJ L 56, 6. 3. 1996, p. 1. (2) OJ L 317, 6. 12. 1996, p. 1. (3) OJ C 201, 1. 7. 1997, p. 8. (3) (4) (5) (6) (7) parties were given the opportunity to make their views known in writing and to request a hearing. The Commission sent questionnaires to all ex- porters and importers known to be concerned and Indian exporting from one received producer. None of the importers replied to the Commission’s questionnaire. replies the Given the large number of Community producers the Commission proceeding, supporting decided to investigate injury on the basis of a selec- tion of Community producers in accordance with Article 17 of the Basic Regulation. Detailed ques- tionnaires were sent to this selection of Com- munity producers and information was received from them. The Commission sought and verified all informa- tion it deemed necessary for the assessment of preliminary determination of dumping and injury and carried out investigations at the premises of the following companies: Community producers — Randers (Denmark), — Oliveira SA (Portugal), — Verto Portugal (Portugal), — Bihr Frères (France), — Quintas & Quintas (Portugal), — Cotesi (Portugal), — Sicor (Portugal), — Geo Gleistein & Sohn (Germany); Producer/exporter — Garware-Wall Ropes Limited, Pune, India. The investigation of dumping covered the period from 1 July 1996 to 31 May 1997 (hereinafter referred to as ‘the investigation period’). The exam- ination of injury covered the period from 1993 up to the end of the investigation period. B. PRODUCT CONCERNED PRODUCT AND LIKE 1. Product concerned The product under consideration is twine, cordage, ropes and cables, whether or not plaited or braided and whether or not impregnated, coated, covered or sheathed with rubber or plastics of polyethylene or polypropylene, other than binder and baler twine, 8. 1. 98 ‹ EN ‹ Official Journal of the European Communities L 4/29 measuring more than 50 000 decitex (5 g/m), plaited and other, as well as other synthetic fibres of nylon or other polyamides or of polyesters measuring more than 50 000 decitex (5 g/m), plaited and other. The product as described above falls within CN codes 5607 49 11, 5607 49 19, 5607 50 11 and 5607 50 19. The product in question is used for a wide variety of naval and industrial applications, in particular for shipping (especially for mooring purposes), and the fishing industry. It is produced in many different types depending on the raw material composition and on the number of strands making up the ropes. 2. Like product The investigation showed that the different types of synthetic fibre ropes sold in India are alike in their physical characteristics, application and use to those exported to the Community industry. Sim- ilarly, the ropes manufactured in the Community and those exported from India to the Community have the same characteristics and compete with each other. It is therefore concluded that they must be considered like products within the meaning of Article 1 (4) of the Basic Regulation. C. DUMPING 1. Normal value trade, by looking at the proportion of profitable sales of the type in question. In cases where, per product type, the volume of sales above unit cost represented less than 80 % but more than 10 % of the total sales volume, the normal value for this type was established on the basis of the weighted average price of profitable domestic transactions only. Where, per product type, the volume of domestic sales above unit cost represented less than 10 % of the total sales volume, domestic sales were considered insuf- ficient in the sense of Article 2 (4) of the Basic Regulation and were therefore disregarded. sales Where, for the corresponding product type, there were no or insufficient similar domestic sales in the ordinary course of trade and given that there was no other cooperating producer in India, normal value was constructed in accordance with Article 2 (3) and Article 2 (6) (b) of the Basic Regulation, i. e. on the basis of all costs of manufacturing and SG&A expenses incurred by the exporting producer when producing the product type concerned for sales on the domestic market, plus a profit margin based on the profitable sales of the like product made by this producer on the domestic market. 2. Export price (13) As the cooperating producer made its export sales to the Community directly to independent im- porters, export price was, in accordance with Article 2 (8) of the Basic Regulation, established on the basis of the prices actually paid or payable by these independent customers. In order to establish normal value, the Commission first analysed whether the total domestic sales of the cooperating exporting producer was represent- ative in accordance with Article 2 (2) of the Basic Regulation i. e. whether the total volume of such sales constituted 5 % or more of the total volume of export sales to the Community. This assessment revealed that the cooperating exporting producer’s domestic sales of synthetic fibre ropes were rep- resentative. 3. Comparison (14) For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences which were claimed and demonstrated to affect price comparability in accordance with Article 2 (10) of the Basic Regulation. The Commission then examined whether total domestic sales of each product type exported to the i. e. whether the Community were representative, volume of such sales constituted 5 % or more of the corresponding type the exported to the Community. volume of sales types meeting this test, For those product the Commission subsequently examined whether the domestic sales of each product type could be con- sidered as being made in the ordinary course of Adjustments for transport, insurance, clearing and handling charges, import charges, credit costs and discounts were granted. indirect taxes, (15) The cooperating exporting producer claimed that an allowance should be granted for the imported charges borne by the raw material imported. This adjustment was granted where the duties shown to be paid on raw materials imported and physically incorporated in the product sold domestically were shown to be refunded when exporting the products. (8) (9) (10) (11) (12) L 4/30 ‹ EN ‹ Official Journal of the European Communities 8. 1. 98 The company also claimed an adjustment for physical characteristics on the grounds that some ropes exported to the Community contained a small proportion of waste. This claim was rejected, in accordance with Article 2 (10) of the Basic Regu- lation, as the company was not in a position to demonstrate that this physical difference had affected sales prices. An adjustment for differences in other factors was also claimed on the grounds that the domestic market infrastructure requires the maintenance of a network of depots throughout the country which affects price comparability. However, the company was neither able to quantify the expenses incurred by this infrastructure nor to demonstrate how these expenses affected prices. In view of the above, this claim was rejected. 4. Dumping margin (16) In accordance with Article 2 (11) of the Basic Regulation, the dumping margin was established on the basis of a comparison between the weighted average normal value by type and the weighted average export price of the corresponding type at an ex-factory level. The comparison of the normal value with the export price showed the existence of dumping, the dumping margin being equal to the amount by which the normal value exceeds the price for export to the Community. a as percentage Expressed Community weighted average dumping margin amounts 96,4 %. frontier price, duty unpaid, free-at- the to the of (17) For exporting producers which neither replied to the Commission’s questionnaire nor otherwise made themselves known, the dumping margin was determined on the basis of the facts available in accordance with the provisions of Article 18 (1) of the Basic Regulation. Eurostat, possibly because of the delay in reporting by national customs authorities. in order to avoid rewarding any Nevertheless, possible non-cooperation, the product type which appeared most dumped was selected, provided that it did not result in a dumping margin lower than that established. The residual dumping margin was the dumping then determined on the basis of margin of the product type selected for the co- operating company. Expressed as a percentage of the free-at-Community frontier price, duty unpaid, the margin is 251 %. D. COMMUNITY INDUSTRY (18) The Community producers supporting the pro- ceeding represented approximately 96 % of the Community production of the product concerned and therefore constituted the Community industry in accordance with Articles 4 (1) and 5 (4) of the Basic Regulation. E. INJURY 1. Preliminary remarks (19) As indicated in recital 6, for the purposes of estab- lishing injury in the present proceeding the Commission has analysed data relating to the period 1993 to May 1997. However, as regards the the development of period considered, for the purpose of a year-to-year comparison, used the figures relating to the 11 months of the investiga- tion period (six months of 1996 and five months of 1997) as a basis for extrapolating the figures for a 12-month period. the injury indicators over the Commission has, (20) The geographical scope of the investigation was the Community as composed at the time of the initi- ation of the proceeding, i. e. the Community of 15 Member States. 2. Collection of injury data A comparison of Eurostat data with the volume of exports to the Community reported by the co- operating exporting producer was made in order to establish the level of cooperation. This comparison showed that the level of cooperation was high. However, during the investigation, the Commission has established that the volume of exports declared by the the product concerned from India to the Community was higher than the volume of imports quantified by cooperating producer of (21) The Commission requested and obtained informa- tion from all producers supporting the proceeding relating to production, sales and employment (‘global information’). In view of the large number of producers the Commission based the remaining injury indicators on information from a selection of Community producers, i. e. capacity, capacity utilization, prices, profitability, cost of production, stocks and invest- ments (‘sampled information’). in the Community industry, 8. 1. 98 ‹ EN ‹ Official Journal of the European Communities L 4/31 Pursuant to Article 17 of the Basic Regulation, the selection was made according to geographical loca- tion and the size of the companies in terms of production and sales and it includes large as well as small companies. Furthermore, it should be noted that more than half of the Community production is located in one Member State. Notwithstanding this, the Commission included producers from other Member States in its selection. The selected companies accounted for 47 % of production and 44 % of the product concerned of the Community industry during the investigation period. sales of 3. Community consumption (22) Community consumption was based on global information on volume of sales of the Community industry and Eurostat information on volume of imports. As regards imports originating in India, the data obtained from Eurostat were adjusted to take account of information supplied by the Indian cooperating exporting producer and verified by the Commission. The volume of sales of the Com- munity producers not cooperating in the pro- ceeding was estimated, on the basis of the available information, at 4 % of the total sales of the whole Community producers. On the above basis, Community consumption increased from 21 820 tonnes in 1993 to 26 405 tonnes in 1995 and remained relatively stable thereafter, reaching 27 049 tonnes in the investiga- tion period, which represents an overall increase of 24 % over the period considered. Community producers during the investigation period, the Commission compared the prices of the selected Community producers with comparable prices of the cooperating exporter concerned in the Community. Due to the large number of different types of synthetic fibre ropes, the price comparison was made on the basis of a selection of transactions representing approximately 70 % of the volume of sales of all types of synthetic fibre ropes made by the Community producers. to take The sales prices of the Community industry con- sidered were those to independent customers, adjusted where necessary to ex-works level. Adjust- ments were made to the exporters’ selling prices (cif Community frontier) account of customs duty paid and an allowance in respect of the importation costs. The transactions of post product types selected represented a large propor- tion of the total volume of imports from India into the Community during the investigation period. All prices were compared after excluding all discounts and rebates and at a comparable level of trade. The results of the comparison (conducted on an average-to-average basis) showed that during the investigation period price undercutting margins for the imports originating in India, expressed as a percentage of the Community industry’s average selling prices ranged from 0 % to 38 % with an overall weighted average of 16 %. The differences in these margins reflect the large variety of ropes falling within the definition of the product concerned. 6. Situation of the Community industry 4. Volume and market share of the dumped imports (a) Production (global information) (23) The total volume of all dumped imports of synthetic fibre ropes originating in India increased significantly over the period considered, rising from 440 tonnes in 1993 to 1 342 tonnes in 1996, then slightly decreasing to 1 239 tonnes in the investiga- tion period. Overall, the volume of dumped imports increased by 182 % between 1993 and the investigation period. The market share of synthetic fibre ropes imported from India rose significantly between 1993 and the investigation period, increasing from 2 % in 1993 to 5,1 % in 1996 then slightly decreasing to 4,6 % in the investigation period. (25) (26) 5. Prices of the dumped imports (24) In order to determine whether producer was undercutting the prices of the exporting the of the product Production levels concerned produced by the Community industry increased during the period considered, going from 19 465 tonnes in 1993 to 22 373 tonnes in the investiga- tion period, which represents an overall increase of 15 %. Production levels should be viewed in conjunction with Community consumption which increased by 24 % during the period considered. (b) Sales volume (global information) of the Community industry The volume of sales of the Community industry on the Community market increased during the period considered, with the sales levels at 19 179 tonnes in 1993 and 20 784 tonnes in the investiga- tion period, which represents an overall increase of 8 %. This trend shows that the sales of Community producers were not able to follow the trend in consumption which increased by 24 % during the period considered. L 4/32 ‹ EN ‹ Official Journal of the European Communities 8. 1. 98 (c) Market share (global information) (27) The development of sales volume compared to that of apparent Community consumption, shows that the market share held by the Community produ- cers decreased during the period considered. The market share of the Community producers went from 88 % in 1993 to 77,5 % in 1995, 78,6 % in 1996 and 76,8 % in the investigation period. The overall loss of market share was 11 percentage points between 1993 and the investigation period. Moreover, it should be noted that the Community industry lost 10 percentage points in market share between 1993 and 1995 which is the period during which the increase in imports from India became particularly relevant. In 1996, the market share of the Community industry slightly improved but was again on the decline in the investigation period. (d) Employment (global information) (28) Employment levels in the Community industry for the product concerned declined during the period considered. Employment fell from 1 247 in 1993 to 1 129 in the investigation period, a decrease of 9 %. Despite a slight improvement between 1995 and 1996, employment declined again in the inves- tigation period. (e) Capacity, capacity utilization (sampled infor- mation) (29) As regards capacity, it should be noted that the production facilities for synthetic fibre ropes are also used in the production of other products not concerned by the present proceedings, products fluctuations of which are subject demand in the market, e. g. agricultural twines. As a consequence, an estimate of the capacity normally attributed to the production of the product concerned by the Community industry had to be made. to seasonal On this basis, capacity slightly increased, from 16 164 tonnes in 1993 to 17 008 tonnes during the investigation period which represents an increase of 5 %. This increase was in line with expectations of market growth (increase in consumption of 24 % over the period concerned). However, the rate of stable capacity utilization remained relatively during the period considered going from 61 % in 1993 to 62 % in the investigation period. (f) Stocks (sampled information) (30) The investigation has the product concerned is usually produced to order within the shown that Community. Generally, therefore, no significant levels of stocks were maintained by the Com- munity producers, although stocks of product ordered and not yet sold exist occasionally. (g) Investments (sampled information) (31) (32) Yearly investments made by the sampled com- panies increased overall, going from ECU 549 996 in 1993 to ECU 1 033 882 in the investigation period. This represents an overall increase of 88 %. It should be noted that this significant increase is due for the most part to investments in replace- ment machinery over the period considered as part of an overall restructuring programme. (h) Productivity (sampled information) Productivity of the Community industry increased overall from 12,45 tonnes per person employed in 1993 to 15,2 tonnes per person employed in the investigation period, in spite of a slight decrease in the investigation period compared to 1996. This increase in productivity must be seen in the context of the significant technological improve- ments in the rope-making machines before and during the period considered which enabled the introduction of leaner and more integrated produc- tion processes. (i) Price evolution (sampled information) (33) The weighted average prices of the product concerned sold by the sampled companies on the Communmity market fluctuated over the period considered, overall however, they increased by 1 %. Furthermore, while the prices of the imports from India increased by 6 % over the period considered, it should be noted that, in the vast majority of cases, these prices were found to be significantly lower that than the Community producers’ prices for the whole period considered. (j) Profitability (sampled information) (34) The profitability of the Community industry, expressed as a percentage of net sales, went from a weighted average loss of – 1,7 % in 1993 to a weighted average loss of – 7,1 % in the investiga- tion period. It should be noted however, that the financial situation deteriotated particularly from 1995 onwards, going from a loss of – 1,2 % to a loss of – 7,1 % in the investigation period. 8. 1. 98 ‹ EN ‹ Official Journal of the European Communities L 4/33 7. Conclusion on injury (35) The investigation has shown that the Community industry has suffered significant price pressure from the imports originating in India over the whole period considered, with undercutting up to 38 %. In addition, the Community industry suffered a significant loss of market share (11 percentage points) at a time when Community consumption increased by 24 %. Employment levels appeared to be on the decline in spite of restructuring efforts made by the Community industry. Furthermore, the Community industry showed a significant deterioration of results from 1995 onwards and a weighted average loss of – 7,1 % of net sales in the investigation period. the financial In the light of the foregoing analysis, the Commis- sion has provisionally concluded that the Com- munity industry has suffered material injury within the meaning of Article 3 (1) of the Basic Regula- tion. F. CAUSATION OF INJURY (36) 1. Effects of the dumped imports In its examination of whether the material injury suffered by the Community industry had been caused by the effect of the dumped imports, the Commission found that the volume of dumped imports increased substantially between 1993 and the investigation period (+182 %). It should be noted that, between 1993 and 1996, the volume of imports originating in India into the Community more than doubled and their cumulated market share increased by 3 percentage points, whilst during the same period the Community industry lost 10 percentage points. Between 1996 and the investigation period, the volume of imports from India slightly declined. However, despite this slight the volume of dumped imports from decrease, in the investigation India remained significant period. it is noted than the market Furthermore, for synthetic fibre ropes is price-sensitive and trans- parent. The Commission found that the product under to be considered as a commodity and that any downward pressure on prices tended to have an immediate impact on the market. investigation is In this context, the Commission found that the the imports from India undercut the prices of Community industry by an average of 16 % and up to 38 % during the investigation period. In addi- tion, over the whole period considered, the prices of imports from India were consistently and signi- ficantly lower the Community industry. It should be noted that this undercutting continued during the investigation period, despite the relative decline in volume of the imports ori- ginating in India in this later period. Furthermore, the Indian prices were found to be the lowest on the market in this period. than those of (37) As concerns the Community industry’s financial situation, it was not favourable at the beginning of the period considered, however, it had significantly deteriorated by the end of the period. Two distinct phases can be observed. Between 1993 and 1995 the Community industry’s financial situ- ation remained relatively stable, albeit loss-making. This shows that the Community industry, under pressure from the dumped imports, attempted to maintain the level of profitability at the expense of market share. From 1995 onwards, however, in the light of the dumped imports, the Community industry had to modify its pricing strategy in order not to lose the market and to maintain further production consequently reduced and profitability significantly deteriorated. the continuous price pressure of Prides were shares of levels. Under the circumstances, it is concluded that the dumped imports of synthetic fibre ropes origin- ating in India have caused material injury to the Community industry. 2. Effects of other factors (38) The Commission examined whether the injury suffered by the Community industry could have been caused by factors other than the dumped imports. In particular, the Commission looked at the trend in consumption in the Community market, the viability of the Community industry, the evolution and impact of imports from third countries not included in the present proceeding and the impact of any increases in the cost of raw materials. (a) Community consumption (39) Community consumption of synthetic fibre ropes increased in total by 24 % between 1993 and the investigation period, with a tendency to stabilize after 1995. The injury suffered by the Community industry cannot, therefore, be attributed to the trend in demand. L 4/34 ‹ EN ‹ Official Journal of the European Communities 8. 1. 98 (b) Competitiveness of the Community industry into the Community, which was relative individual share of imports. the highest (40) Despite losses in the beginning of the period, it is recalled that over the period considered the Community industry made significant investments in replacement machinery in order to tie-up with developments in technology. These new machines enabled a leaner and more integrated production process, which in turn resulted in a notable increase in productivity of 22 % between 1993 and the investigation period. Moreover, the Community industry continued its efforts in research and deve- lopment and in quality control the period considered. The Community industry there- fore improved its performance both in cost and in quality terms over the period considered. throughout (c) Imports from other third countries (41) of the overall market The Commission found that share from third countries not imports concerned by these proceedings increased by 8,5 % during the period considered. The Commission examined in particular imports from the Republic of Korea, Norway, Poland, Russia and the Czech Republic. As regards the imports from the Republic of Korea, an anti-dumping proceeding was initiated on 31 July 1997, following a complaint by Eurocord on the Community industry (1). Since the behalf of market share of the imports originating in the Republic of Korea significantly progressed during the period considered from 0,4 % to 4 %, it cannot be excluded that Korean imports contributed to the injury sustained by the Community industry. However, the results of the investigation are still pending. The market share held by imports from Norway, Russia and the Czech Republic increased over the period considered, but their prices were found to be higher than Indian prices. The prices of imports originating in Poland were found to be lower than Indian prices only in 1994, their market the period considered. share remained stable over furthermore, It should be further noterd that, except for 1994, the Indian import prices were found to be the lowest on the market in the period considered. Moreover, between 1995 and the investigation period, the volume of the Indian imports alone represented 20 % of the total volume of imports (1) OJ C 232, 31. 7. 1997, p. 6. (d) Changes in the prices of raw materials (42) The Commission also considered whether the injury suffered by the Community industry could have been caused by the fluctuations in the cost of the raw materials during the period considered. The Commission found significant fluctuations in the cost of the period the raw materials over concerned. Overall, the prices of polyethylene and polypropylene granulates, the main raw materials used in the production of the product concerned, increased respectively by 41 % and 52 % between 1993 and the investigation period. Considering that the raw materials account for approximately 50 % of the total costs of production, the average sales price charged by the Community industry should have increased by 23 % over the period considered to cover the overall increase in raw material costs. This should be compared to an overall increase in the sales prices of the Community industry of 1 %. 3. Conclusion on causation (43) Although it cannot be excluded that the variation in the cost of raw materials may have had a certain adverse effect on the situation of the Community industry, and that some of the imports from other third countries may have contributed to the loss in market share and the negative situation of the Community industry, this does not detract from the fact that the imports of synthetic fibre ropes originating in India, taken in isolation, caused material injury to the Community industry. This conclusion is drawn in particular given the loss of market share of the Community industry combined with a deterioration of profitability, which coincided with an increase in the volume and market share of Indian imports at prices that constantly undercut the Community industry, at levels found to be the lowest on the market in the investigation period. those of G. COMMUNITY INTEREST 1. Preliminary remarks (44) The Commission provisionally examined, on the basis of the information submitted, whether despite the dumping and injury findings, compelling reasons exist which would lead to the conclusion that it is not in the Community interest to impose measures in the present case. 8. 1. 98 ‹ EN ‹ Official Journal of the European Communities L 4/35 For this purpose, the Commission has considered the impact of possible measures for all parties involved in the proceedings and also the con- taking sequences for those same parties, of not provisional measures. 2. Collection of information (45) In order to assess the likely impact of measures, the in- Commission requested information from all in- terested parties known to the Commission, cluding parties in the upstream industries, the Community industry, and user industries. It is to be noted that the Commission received only limited and generic replies. The parties examined in the context of the present Community interest analysis fall into the following main categories: raw material producers upstream, the Community industry, the importers/ distributors and users downstream. the It should be noted that synthetic fibre ropes are sold in the Community in their finished state, therefore no downstream processing industry as such is concerned by these proceedings. (48) 3. Interests of the raw material producers (46) The raw materials used in the production of the product are polymers such as, inter alia, poly- propylene, polyethylene, polyamide and polyester. These polymers can be in the form of granulates, which need to be extruded, or yarns. They are generally produced in the Community by the main petrochemical industrial groups. Although a number of raw material producers wrote to the Commission in support of the present proceedings, there appears to be no evidence that these producers would be significantly affected by the imposition or the non-imposition of measures, given that their sales to rope producers would be marginal to their overall businesses. 4. Interests of the Community industry (49) (a) Nature and structure of the Community industry (47) The Community industry is made up of some 30 companies that produce the product concerned. The Community industry is spread over most Member States, however a large concentration of companies is to be found in Portugal. The Portu- guese producers accounted for approximately 60 % of the production of the Community industry in the investigation period. The Community producers are, for the largest part, family-owned small- to medium-sized companies. The Community industry essentially transforms the raw materials into synthetic fibre rope through the following main production phases: an extrusion phase (the melting of the raw materials into useable yarn), a stranding phase (creating strands from the yarns) and a twisting or braiding phase (twisting or braiding the strands to make up the rope). The product concerned is a finished product that does not generally undergo any further significant trans- formation. (b) Viability of the Community industry invested significantly The financial situation of the Community industry was not favourable already at the beginning of the period considered, leading to restructuring during this period. The investigation has shown that as a result of the dumped imports the financial situ- ation of the Community industry has worsened significantly and that the Community industry has lost significant market share over the period con- sidered. However, it is recalled that the Community industry the period considered in new machinery, which enabled the introduction of more efficient produc- tion processes. The Community industry also invested into quality assurance and control and has undergone important research and development efforts to introduce the production of new types of special ropes providing a higher added value and involving more advanced technologies. Finally, at the end of the investigation period the Community industry still held a significant market share, which demonstrates that Community producers are reli- able suppliers. throughout (c) Likely effects of the imposition or non-imposi- tion of measures If the pressure exerted by the dumped imports is allowed to continue further, financial losses would continue to occur. The Community industry would then not be able to finance its efforts in developing products and over a longer term company closures could follow. In this respect it is noted that the Commission were informed that, as a consequence of the price pressure existing on the Community market during the period considered, a number of Community producers have had to limit their production range and a number of others have stopped producing altogether. L 4/36 ‹ EN ‹ Official Journal of the European Communities 8. 1. 98 It is very likely that without measures to correct the effects of dumped imports, this negative trend will continue. On the other hand, if measures were imposed, the Community industry should be able to increase prices and improve profitability. 5. Interests of the importers/distributors (50) The distribution chain of the product concerned is characterized by an important number of im- porters-distributors who, unlike the Community industry, hold significant levels of stocks of the product concerned. It is important to note that the distributors have an important power in setting the price level for the product concerned often re- sulting from their unique position in the distribu- tion chain. The importers/distributors generally act as the intermediaries between both the Community industry and the exporters, and the users. A typical example of the role of the importers/distributors is the activity of a ship’s chandler in a major port; the ship’s chandler will often determine the source of his supply (Community or imported) on the basis of the price charged for the product concerned on the day. Since the importers and distributors have the power to set the prices on the market and since they are generally free to determine the source of their supply (Community or imported), the Commission do not see that they would be significantly affected by the imposition or non-imposition of measures. submitted to the Moreover, no evidence was Commission that this would not be the case. 6. Interests of the users (51) The users of the product concerned mainly consist of the fishing and shipping industries. Given the extreme price sensitivity of the market, the Commission believes that, the impact of the imposition of measures would in all likelihood take the form of a price increase. Ropes are generally used for mooring purposes, general on-board purposes or for ancillary purposes to the use of fishing nets. The costs relating to the to the main costs ropes is therefore peripheral incurred concerned, when industry compared to other costs such as the depreciation of the by the vessels, fuel, insurance, labour or maintenance. This conclusion is reinforced given that synthetic fibre ropes can be used for a long time, without specific maintenance. According to the information available, the Commission believe, therefore, that the product concerned only represents a negligible part of the user industries, which also explains the lack of cooperation from the users in this present proceeding. Any expected price increase would therefore be marginal for the users. the overall costs of 7. Conclusion on Community interest (52) Given the rate of increases of imports from India over the period considered and the exporter’s be- haviour on the Community market to constantly and significantly undercut the Community industry, there is a likelihood that, in the absence of measures, this trend will continue and further aggravate the injury caused to the Community producers. the prices of The effects of the imposition of measures can be expected to assist the Community industry to improve profitability, with consequent beneficial effects on the competitive conditions on the Community market and the reduction of the threat of further closures and reductions in employment. The beneficial effects are also expected to assist the Community producers to take full advantage of the investments made in recent years, to continue developing new products of higher technology for new and specialized applications. As regard the user industries, any expected price increase would only have a marginal impact. The Commission has concluded that, in the circumstances there are no compelling reasons not to impose measures. H. PROVISIONAL DUTY 1. Injury elimination level (53) Having established that the dumped imports under consideration have caused material injury to the Community industry and that there are no compel- ling reasons not to take action, provisional anti- dumping measures adopted. The measures envisaged should be sufficient to elim- inate the injury caused by these imports without exceeding the dumping margins found. should be 8. 1. 98 ‹ EN ‹ Official Journal of the European Communities L 4/37 such injury requires The removal of the industry should be put in a position where prices reach a level which would prevail in the absence of dumped imports. It was concluded that at such a level Community producers could cover their costs of prodution plus a reasonable amount for profit. that Therefore, the weighted average export prices for those product types used in the determination of price undercutting were compared, for the period of investigation, on a cif Community frontier level, adjusted to take account of customs duty paid and an allowance in respect of post importation costs, with the actual weighted average selling prices charged by the selected Community producers concerned, increased, where appropriate, to cover production cost plus a profit margin of 5 %. This profit margin was considered, for the purpose of a preliminary determination, to be the minimum profit level necessary to make this sector viable. It the product takes concerned is considered by the interested parties as being a commodity. account of that fact the This comparison showed an injury margin of 53,0 % of free-at- Community frontier price, before duty. the weighted average net, 2. Provisional anti-dumping duty (54) According to Article 7 (2) of the Basic Regulation, the level of the provisional anti-dumping duties should be equal either to the margin of dumping or injury, whichever is the lower. amount necessary to remove the Since the injury margin provisionally found for the than the respective Indian exporter lower dumping margin, the rate of provisional anti- dumping duty for this exporter should be based on the injury elimination level found. is (55) For companies which did not cooperate in the investigation, the provisional duty is based on the injury margin, i. e. 82,0 %, found for the product type selected for the establishment of dumping margin in respect of these companies, since the dumping margin exceeded the injury margin. may make their views known in writing and request a hearing. Furthermore, should be emphasised that all findings made for the purpose of this Regulation are provisional and may have to be reconsidered for the purpose of any definitive duty which the Commission may propose, it HAS ADOPTED THIS REGULATION: Article 1 1. A provisional anti-dumping duty is hereby imposed on imports of synthetic fibre ropes falling within CN codes 5607 49 11, 5607 49 19, 5607 50 11 and 5607 50 19 originating in India. 2. For the purposes of this Regulation, the rate of the provisional anti-dumping duty applicable to the net free- at-Community frontier price before duty shall be as follows: — Garware Wall Ropes Ltd — Other manu- facturers 53,4 % (additional Taric code 8755), 82,0 % (additional Taric code 8900). The provisions in force concerning duties and other 3. customs practices shall apply. 4. The release for free circulation in the Community of the products referred to in paragraph 1 shall be subject to the provision of a security, equivalent to the amount of the provisional duty. Article 2 Pursuant to Articles 20 and 21 of Regulation (EC) No 384/96 of 22 December 1995, the parties concerned may make their views known in writing and apply to be heard orally by the Commission within one month of the entry into force of this Regulation. Article 3 Subject to Articles 7, 9, 10 and 14 of Regulation (EC) No 384/96 of 22 December 1995, Article 1 of this Regulation shall apply for a period of the Commission extends its validity or the Council adopts definitive measures before the expiry of that period. six months unless I. FINAL PROVISION Article 4 (56) In the interests of sound administration, a period should be fixed in which the parties concerned This Regulation shall enter into force on the day fol- lowing its publication in the Official Journal of the European Communities. L 4/38 ‹ EN ‹ Official Journal of the European Communities 8. 1. 98 This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 7 January 1998. For the Commission Leon BRITTAN Vice-President