Commission Regulation (EC) No 2107/98 of 1 October 1998 imposing provisional anti-dumping duties on imports of polypropylene binder or baler twine originating in Poland, the Czech Republic, Hungary and Saudi Arabia and accepting undertakings offered by certain exporters in connection with those imports
2. 10. 98 EN Official Journal of the European Communities L 267/7 COMMISSION REGULATION (EC) No 2107/98 of 1 October 1998 imposing provisional anti-dumping duties on imports of polypropylene binder or baler twine originating in Poland, the Czech Republic, Hungary and Saudi Arabia and accepting undertakings offered by certain exporters in connection with those imports 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 from countries the European Community (1), as last amended by Regulation (EC) No 905/98 (2), and in particular Articles 7 and 8 thereof, not members of After consulting the Advisory Committee, Whereas: (1) A. PROCEDURE On 3 January 1998, the Commission announced, by a notice published in the Official Journal of the European Communities (3), the initiation of an anti-dumping proceeding concerning imports of polypropylene binder or baler twine originating in Poland. On 28 February 1998 (4), the Commission similarly announced the initiation of an anti- the dumping proceeding concerning imports of same product originating in the Czech Republic, Hungary and Saudi Arabia. The proceeding with respect to imports of poly- propylene binder or baler twine originating in Poland was initiated subsequent to the lodging of a complaint by the Liaison Committee of European Union Twine, Cordage and Netting Industries (Eurocord) in November 1997. The proceeding with respect the same product originating in the Czech Republic, Hungary and Saudi Arabia was initiated following a second complaint lodged by Eurocord in January 1998. to imports of complaints were producers lodged on behalf representing of The Community a major proportion of the Community production of poly- propylene binder or baler twine. The complaints contained evidence of dumping of the said product, and of material injury resulting therefrom, which (1) OJ L 56, 6. 3. 1996, p. 1. (2) OJ L 128, 30. 4. 1998, p. 18. (3) OJ C 1, 3. 1. 1998, p. 10. (4) OJ C 65, 28. 2. 1998, p. 8. was considered sufficient to justify the opening of the proceedings. It was subsequently considered appropriate, both dumping and injury analysis purposes, combine the two investigations (see recital 5). for to The Commission officially advised the exporting producers and importers/distributors known to it, the representatives of the exporting countries and the complainant Community producers of the initiation of the proceedings. Interested parties were given the opportunity to make their views known in writing and to request a hearing. All parties who so requested were granted a hearing. in Poland, The Commission sent questionnaires to all parties known to be concerned and received information from 10 complainant Community producers, seven exporting producers two exporting producers in the Czech Republic, three exporting producers in Hungary and one exporting producer in Saudi Arabia. The Commission also received meaningful and complete replies from one unre- lated importer in the Community and one unre- lated importer located in Switzerland. The Commission sought and verified all the infor- mation it deemed necessary for the purpose of a preliminary determination of dumping, resulting injury and Community interest, and carried out verification visits at the premises of the following companies: (a) Complainant Community producers (2) (3) (4) Austria: ü Teufelberger, Linz, Austria; Belgium: ü Ostend Stores, Oostende, Belgium; Portugal: ü Cordex, Esmoriz, Portugal, ü Cotesi, Carvalhos, Portugal, ü Exporplas, Cortegaca, Portugal, ü Sicor, Cortegaca, Portugal. L 267/8 EN Official Journal of the European Communities 2. 10. 98 (b) lmporters/distributors ü W. B. V. Oelde, Oelde, Germany, ü Fybron, Luzern, Switzerland. (c) Exporting producers Poland: ü BZLP Bezalin, Bielsko-Biala, ü CZWC Chemitex, Sochaczew, ü Industrial Chemistry Research Institute, (8) Warsaw, ü PAT Defalin sa, Swiebodzice, ü Terplast sp. zo. o, Sieradz; Czech Republic: ü Lanex a. s. , Bolatice, ü Juta a. s. , Dvur Kralove nad Labem; Hungary: ü Elso Magyar Kenderfono Rt, Szeged, ü Partium ’70 Rt, Berettyoujfalu, ü Tiszai Vegyi Kombinat Rt, Tiszaujvaros; Saudi Arabia: ü Saudi Yarn and Knitting Technology Factory (Synthec), a division of NAFA Enterprises Ltd, Riyadh. (9) (5) With regard to both proceedings, the investigation of dumping covered the period 1 January to 31 December 1997 (hereinafter referred to as ‘the investigation period') and the examination of injury covered the period from January 1994 to the end of the investigation period. B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 1. The product concerned (6) The product concerned is polypropylene binder or baler twine (hereinafter referred to as ‘twines'). These twines are used in the agricultural sector, notably for binding bundles to be picked up by automatic balers or similar machines. The product is manufactured in different thick- nesses (runnages) and with different specifications in respect of, for example, knot and tensile strength, number of twists/turns per metre, colour, ultra-violet stabilisation and fibrillation. The invest- shown that, notwithstanding the igation has different the product concerned, all twines constitute a single product for the purposes of the investigation. The product concerned is currently classifiable within CN code ex 5607 41 00. thicknesses and specifications of 2. Like product (7) by Polypropylene binder or baler twines produced and sold on the Community market were found to be alike to the imports from the exporting countries concerned in the Community industry (10) their basic physical and technical characteristics and in their uses. The same is true with regard to the product manufactured and sold on the domestic market of countries the concerned. All these products are, therefore, like products, as defined by Article 1(4) of Regulation (EC) No 384/96 (hereinafter referred to as ‘the Basic Regulation'). exporting One Hungarian exporter claimed that the products it sold to the Community market should not be likened to the products of the Community industry, as their end-use was different. However, since no evidence was provided to back up this the Commission sees no reason why assertion, these Hungarian products should be excluded from the scope of this proceeding. C. DUMPING 1. Poland (a) Cooperation Cooperating exporting producers accounted for a relatively low proportion of total imports origin- ating in Poland. Seven exporting producers located in Poland initially replied to the questionnaire. Of these seven replies, however, two were considered to be wholly inadequate for the purposes of the investigation, as the information provided did not permit an accurate determination either of normal values or of export prices. These companies were duly informed and were then given the opportunity to rectify the deficiencies in their responses, which they failed to do. The two companies concerned were therefore informed that they would be consid- ered as non-cooperating, in accordance with Article 18 of the Basic Regulation. (b) Normal value the To neutralise the effects of inflation on the calcula- tions, normal value was established for periods of time as close as possible to the relevant export dates where information was appropriate provided by the exporting producers concerned. In all cases, the most detailed information was used. four companies, normal values were Thus, calculated on a monthly basis and for one company, on an annual basis. This approach also takes into account the intensive and that product concerned is capital average stocking periods are short. the production of that for (11) On this basis, it was first determined whether domestic prices could be used in the determination of normal value, i. e. whether domestic sales of the product concerned had been made in sufficient quantities to independent customers in the or- dinary course of trade. 2. 10. 98 EN Official Journal of the European Communities L 267/9 (12) i. e. for concerned For all five cooperating companies, sales of twines made on the domestic market were, overall, made in representative quantities, they constituted 5 % or more of the quantity exported to the Community. However, the individual types of the product the sold Community largely did not correspond to those sold on the domestic market. On a per-type basis, indeed, it was found that, for all companies, the types concerned sold quantity of domestically was less than 5 % of the quantity of the comparable types to the Community. In all cases, therefore, normal value was constructed, in accordance with Article 2(3) of the Basic Regulation. sold for export the product export to Constructed normal values were calculated on the basis of the cost of production in Poland (including selling, general and administrative (SGA) expenses) plus a reasonable amount for profit. In all cases, each company’s own SGA expenses were used. The rate of profit was calculated, in accordance with the Basic Regulation, using the Article 2(6) of the sole actual cooperating producer located in Poland which had sufficient quantities of domestic sales of the like product in the ordinary course of trade. rate of profit established for (c) Export price tive cif import prices at the Community border duty unpaid, are set out below: ü BZLP Bezalin: ü CZWC Chemitex: ü PAT Defalin sa: ü Industrial Chemistry Research Institute: ü Terplast sp zo. o: 20,1 % 22,7 % 16,3 % 28,4 % 27,9 %. (16) For those exporting producers located in Poland, which failed to cooperate with the investigation, dumping was determined on the basis of the facts available in accordance with Article 18(1) of the Basic Regulation. This was done in order not to reward non-cooperation and in order to avoid circumvention. imports Since there was a relatively high proportion of total from Poland accounted for by non-cooperators, a residual dumping margin was calculated, based on the highest dumping margin found for a representative type exported by a coop- erating exporting producer in Poland. The residual dumping margin determined for Poland, expressed as a percentage of the cif import price at the Community border duty unpaid, is 40,9 %. (13) All sales of the product concerned on the Community market were made to independent customers in the Community. Export prices were therefore established on the basis of prices actually paid or payable for the product when sold for export in accordance with to the Community, Article 2(8) of the Basic Regulation. (17) (18) (d) Comparison (14) In order to ensure a fair comparison between the normal value and the export price at the same level of trade, due allowance in the form of adjustments was made for differences in factors affecting prices and price comparability in accordance with Article 2(10) of the Basic Regulation. Adjustments were made for differences in discounts and rebates, transport, insurance, handling, loading and ancil- lary costs, packing costs, credit and commissions. (e) Dumping margin (15) Weighted average normal value per type of the product compared with the weighted average export price on an ex-works basis and at the same level of trade, in accordance with Article 2(11) of the Basic Regulation. concerned was The weighted average dumping margins provision- ally determined for the five cooperating exporting producers, expressed as a percentage of the respec- 2. Czech Republic (a) Normal value It was first determined whether domestic prices could be used in the determination of normal value, i. e. whether domestic sales of the product concerned had been made in sufficient quantities to independent customers in the ordinary course of trade. of exported to the quantity For one of the two Czech exporting producers, sales of twines made on the domestic market were, overall, made in representative quantities, i. e. 5 % or more the Community. However, as for Poland, the individual types of the product concerned sold for export to the Community by this exporting producer largely did not correspond to those sold on the domestic market. On a per-type basis, indeed, it was found that the quantity of the product types concerned sold domestically was less than 5 % of the quantity of the comparable types sold for export to the Community. Since the domestic prices of the other Czech exporting producer could not be used, as provided for by Article 2(1) of the Basic Regulation (the product two cooperating exporting producers were different), types manufactured the by L 267/10 EN Official Journal of the European Communities 2. 10. 98 normal value was constructed in accordance with Article 2(3) of the Basic Regulation. Constructed normal value was calculated for this exporting producer on the basis of the verified cost of production (including the company’s own SGA expenses) plus a reasonable amount for profit. The rate of profit was calculated, in accordance with Article 2(6) of the Basic Regulation, using the profit established for domestic sales of the like product made in the ordinary course of trade by the producer concerned. the For producer second Czech exporting concerned, it was found that sales of twines on the domestic market during the investigation period were, overall and on a per-type basis, made in representative quantities and in the ordinary course of trade. Normal value for this company was therefore estab- lished on the basis of the comparable prices paid or payable the product concerned by independent customers in the or- dinary course of trade, in accordance with Article 2(1) of the Basic Regulation. for domestic sales of The weighted average dumping margins provision- ally determined for the two cooperating exporting producers, expressed as a percentage of the respec- tive cif import prices at the Community border duty unpaid, are set out below: ü Lanex a. s. : ü Juta a. s. : 24,8 % 24,9 %. (22) The proportion of total imports from the Czech Republic accounted for by cooperating producers was high. A residual duty was therefore calculated, on the basis of the facts available in accordance with Article 18(1) of the Basic Regulation, using the highest dumping margin found for an individual cooperating located in the Czech Republic. company The residual dumping margin determined for the Czech Republic, expressed as a percentage of the cif import price at the Community border duty unpaid, is 24,9 %. 3. Hungary (b) Export price (a) Normal value (19) All sales of the product concerned on the Community market were made to independent customers in the Community. Export prices were therefore established on the basis of prices actually paid or payable for the product when sold for in accordance with to the Community, export Article 2(8) of the Basic Regulation. (23) As for Poland (see recital 10), normal values were established for periods of time as close as possible to the relevant export dates, where the appropriate information was provided by the exporting produ- cers concerned. For one company, normal values were thus calculated on a monthly basis and for two companies, on an annual basis. (24) (25) (c) Comparison (20) In order to ensure a fair comparison between the normal value and the export price at the same level of trade, due allowance in the form of adjustments was made for differences in factors affecting prices and price comparability in accordance with Article 2(10) of the Basic Regulation. Adjustments were made for differences in discounts and rebates, transport, insurance, handling, loading and ancil- lary costs. (d) Dumping margin (21) Weighted average normal value per type of the compared with the product weighted average export price on an ex-works basis and at the same level of trade, in accordance with Article 2(11) of the Basic Regulation. concerned was It was first examined whether domestic prices could be used in the determination of normal value, i. e. whether domestic sales of the product concerned had been made in sufficient quantities to independent customers in the ordinary course of trade. Where this was not the case, normal value was constructed, in accordance with Article 2(3) of the Basic Regulation. The use of the prices of other exporting producers, as provided for by Article 2(1) of the Basic Regulation, was not considered appro- priate as domestic sales of the product concerned were made in representative quantities in the or- dinary course of trade by one company for very few product types only. three cooperating Hungarian exporting For all producers, overall sales of twines on the domestic market exceeded the threshold of 5 % of export sales. As for Poland and the Czech Republic, however, the product concerned sold to the Community largely did not correspond to those sold on the domestic market. At the following was ascertained: individual product the individual the level of types of types 2. 10. 98 EN Official Journal of the European Communities L 267/11 For one company, on a per-type basis, although domestic sales of a number of types exceeded the threshold of 5 % of export sales, none were made in the ordinary course of trade. Normal value was types exported in therefore constructed for all accordance with Article 2(3) of the Basic Regula- tion. For the second company, on a per-type basis, the threshold of 5 % was exceeded for one type only. Fewer than 10 % of sales of this one type were, however, profitable. It was therefore determined that the product that had been exported to the Community had not been sold on the domestic market during the investigation period in sufficient quantities in the ordinary course of trade. Normal value was therefore constructed in accordance with Article 2(3) of the Basic Regulation. (27) (28) some of For the remaining company, on a per-type basis, a types were sold in repres- number of product these types, entative quantities. For however, fewer than 10 % of sales were profitable, i. e. they were not sold in the ordinary course of trade. For all product types which were either not sold in representative quantities or not in the or- value was dinary constructed. The remaining product types that had been exported to the Community had been sold on the domestic market in the ordinary course of trade in sufficient quantities and normal value was estab- lished on the basis of domestic selling prices of these types. trade, normal course of For all three cooperating exporting producers, constructed normal value was calculated, where appropriate, on the basis of the verified cost of production in Hungary (including SGA expenses) plus a reasonable amount for profit. In all cases, each company’s own SGA expenses were used. The rate of profit was calculated, in accordance with Article 2(6) of the Basic Regulation, using the actual rate established for the sole cooperating Hungarian producer for which sufficient domestic sales of the like product were made in the ordinary course of trade. (b) Export price (26) All sales of the product concerned on the Community market were made to independent customers in the Community. Export prices were established on the basis of prices actually paid or payable for the product when sold for export to the Community, in accordance with Article 2(8) of the Basic Regulation. (c) Comparison In order to ensure a fair comparison between the normal value and the export price at the same level of trade, due allowance in the form of adjustments was made for differences in factors affecting prices and price comparability in accordance with Article 2(10) of the Basic Regulation. In particular, adjust- ments were made to export prices and normal values for differences in discounts and rebates, transport, insurance, handling, loading and ancil- lary costs, credit and commissions, and for differ- ences in level of trade, where warranted. (d) Dumping margin the same level of For two companies, weighted average normal value per type of the product concerned was compared with the weighted average export price on an ex- works basis and at in accordance with Article 2(11) of the Basic Regula- tion. For the third company, weighted average normal values were compared to individual export prices, as a pattern of export prices which differed significantly among purchasers was apparent and as the weighted average would not reflect the full degree of dumping being practised. trade, The weighted average dumping margins provision- ally determined for the three cooperating exporting producers, expressed as a percentage of the respec- tive cif import prices at the Community border duty unpaid, are set out below: ü Elso Magyar Kenderfono Rt: ü Partium ’70 Rt: ü Tiszai Vegyi Kombinat Rt: 33,3 % 12,1 % 26,4 %. (29) total The proportion of imports from Hungary accounted for by cooperating producers was high. A residual duty was therefore calculated, on the basis of the facts available in accordance with Article 18(1) of the Basic Regulation, using the highest dumping margin found for an individual cooperating company located in Hungary. The residual dumping margin determined for Hungary, expressed as a percentage of the cif import price at the Community border duty unpaid, is 33,3 %. 4. Saudi Arabia (a) Normal value (30) For the sole cooperating exporting producer, it was twines on the established that overall sales of domestic market exceeded the threshold of 5 % of export sales and were therefore made in repres- also entative quantities. This threshold was L 267/12 EN Official Journal of the European Communities 2. 10. 98 exceeded on an individual product type basis. It was further established that all domestic sales were made in the ordinary course of trade, pursuant to Article 2(4) of the Basic Regulation. Normal value was therefore based for the Saudi Arabian exporting producer, as set out in Article 2(1) of the Basic Regulation, on the basis of the prices paid or payable for all domestic sales of the product concerned to independent customers in the Saudi Arabian market during the investigation period. (35) (b) Export price (31) All sales of the product concerned on the Community market were made to independent customers in the Community. Export prices were therefore established on the basis of prices actually paid or payable for the product when sold for export in accordance with to the Community, Article 2(8) of the Basic Regulation. (c) Comparison (32) In order to ensure a fair comparison between the normal value and the export price at the same level of trade, due allowance in the form of adjustments was made for differences in factors affecting prices and price comparability in accordance with Article 2(10) of the Basic Regulation. Adjustments were made insurance, handling, loading and ancillary costs, commissions and after-sales costs. for differences in transport, (d) Dumping Margin (33) Weighted average normal value per type of the compared with the product weighted average export price on an ex-works basis and at the same level of trade, in accordance with Article 2(11) of the Basic Regulation. concerned was The weighted average dumping margin provision- ally determined for the sole cooperating producer in Saudi Arabia, expressed as a percentage of the respective cif the Community border duty unpaid, is set out below: import prices at ü Saudi Yarn and Knitting Technology Factory (Synthec), a division of NAFA Enterprises Ltd: 36,8 %. (34) Since the cooperating producer accounted for almost all imports from Saudi Arabia, a residual duty was calculated, on the basis of the facts avail- able in accordance with Article 18(1) of the Basic Regulation, using the dumping margin found for this producer. The residual dumping margin determined for Saudi Arabia, expressed as a percentage of the cif import price at the Community border duty unpaid, 36,8 %. is D. DEFINITION THE OF INDUSTRY COMMUNITY by however, subsequently the share of held Ten complainant Community producers initially these 10 replied to the questionnaire. Two of companies, not did cooperate with the investigation. The investigation the total Community showed that production eight Community producers during the investigation period amounted to more than 70 % of total Community production. Therefore, the cooperating Community producers constitute the Community industry within the meaning of Article 4(1) of the the cooperating Basic Regulation. Hereinafter, Community producers are referred to as the ‘Community industry'. remaining the E. INJURY 1. Consumption in the Community (36) Community of by the volume industry and by consumption was based on the the sales made combined Community remaining non-cooperating Community producers as well as on import volumes. As regards the latter, the data obtained from Eurostat were adjusted to take account of information supplied by the cooperating exporting producers and verified by the Commis- sion. The volume of sales of the Community producers not cooperating in the proceeding was estimated, on the basis of the information available, at around 30 % of the total sales of all Community producers. On the above basis, Community consumption increased slightly, from 40 230 tonnes in 1994 to 44 363 tonnes in 1995. In 1996 apparent consump- tion increased substantially to 52 798 tonnes, reaching 52 526 decreasing slightly thereafter, tonnes in the investigation period. This represents an overall increase of 31 % during the period considered. 2. Imports of from the exporting countries concerned into the Community twines (a) Cumulation (37) The dumping margins established are not de minimis, and market the countries concerned were not negligible. Imports from the countries all showed an upward trend. Moreover, it was found that the prices of these imports were all in the same range. shares of 2. 10. 98 EN Official Journal of the European Communities L 267/13 It should also be recalled that twines imported from the exporting countries concerned are entirely interchangeable among themselves and with twines produced and sold by the Community industry and are sold through the same sales channels in a market which is therefore transparent. concluded, in accordance with Article 3(4) of the Basic Regulation, that a cumulative assessment of the effects of the imports is appropriate in light of competition between the the imported products and between the imported prod- ucts and the like Community product. conditions It was of types of sales of all the total volume of Following this methodology, the price comparison was made on the basis of a sales volume rep- resenting approximately 70 % of the total volume of twines made by the Community industry. The transactions of the types of twines selected also represented a large propor- tion of imports from the exporting countries concerned. The sales prices of the Community industry considered were those to independent customers, adjusted where necessary to an ex-works level, i. e. excluding transport costs. Adjustments were made to the exporting producers’ selling prices (cif Community frontier) to take account of customs duty paid. All prices were compared after excluding discounts and rebates. (b) Volume, value and market share of imports from the exporting countries concerned The volume of imports from the four countries concerned increased from 5 263 tonnes in 1994 to 16 441 tonnes during the investigation period, representing an increase of more than 200 %. of market In terms share based on total Community consumption, the market penetration of the dumped imports from the four countries concerned rose from 13 % in 1994 to 31 % during the investigation period in volume terms ü an increase of 138 %. expressed as industry’s the comparison (which with the The results of exception of one Hungarian producer was conducted on a weighted-average to weighted- showed that price undercutting average basis) a percentage margins, the of Community selling prices, average ranged as follows: for Poland from 5,7 to 17,4 % with an overall weighted average of 14,6 %, for the Czech Republic from 16,1 to 19,2 % with an overall weighted average of 16,1 % and for Hungary from 17,8 % to 21,4 % with an overall weighted average of 18,2 %. Price undercutting for Saudi Arabia was 3,8 %. (c) Prices of imports from the exporting countries concerned 3. Situation of the Community industry the Czech the imports from Poland, Prices of Republic and Saudi Arabia increased from 1994 to the end of the investigation period. It should be noted that, these prices were found to be significantly lower than those of the Community industry over the whole period considered. As concerns Hungary, prices decreased slightly during the same period. in the vast majority of cases, (d) Price undercutting of imports from the exporting countries concerned the determination of price undercutting For regarding the exporting countries concerned, the Commission analysed data referring to the invest- igation period. Price undercutting was established on the basis of a comparison of the export price with prices charged by the Community industry at the same level of traders/distributors, which purchase directly from the exporting prod- ucers and the Community industry, and for directly the four comparable types of Member States with the most important markets, i. e. Germany, France, and the United Kingdom. twines and for trade, Italy i. e. (a) Production, capacity and capacity utilisation (42) Production of the Community industry increased during the period considered, rising from 25 767 tonnes in 1994 to 30 133 tonnes in the invest- igation period. This represents an overall increase of 17 %. Production increased at a lower rate than Community consumption, which increased by 31 % during the period considered. (43) As regards capacity, it should be noted that the production facilities for twines are also used in the production of other products not concerned by the present proceedings, e. g. ropes. As a consequence, the capacity an estimate based on turnover, of normally attributed to the production of the product concerned by the Community industry had to be made. On this basis, capacity increased from 38 732 tonnes in 1994 to 42 984 tonnes during the investigation period, which represents an increase of 11 %. This increase was in line with expectations of market growth. The rate of capacity utilisation increased slightly during the period considered, rising from 66,5 % in 1994 to 70 % in the investigation period. (38) (39) (40) (41) L 267/14 EN Official Journal of the European Communities 2. 10. 98 (44) (45) (b) Sales volume 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 21 953 tonnes in 1994 and 24 166 tonnes in the invest- igation period. This represents an overall increase of 10 %. This trend shows that the sales of the Community industry did not follow the trend in consumption, which increased by 31 % during the period considered. (c) Market share The development of sales volume compared to that of Community consumption shows that the market share held by the Community industry decreased during the period considered. The market share of the Community industry decreased from 54,6 % in 1994 to 50,4 % in 1995, 49,2 % in 1996 and 46 % during the investigation period. The overall loss of market share was 8 percentage points between 1994 and the investigation period. (d) Stocks (46) Stocks significantly increased between 1994 and the investigation period by 44,4 %. Community industry decreased to 639, 7,2 %. i. e. by 4. Conclusion on injury (51) The investigation has shown that the Community industry was subject to substantial price undercut- ting from the dumped imports, which significantly increased in terms of volume and market share. In addition, the Community industry suffered a signi- ficant loss of market share (8 percentage points) at a time when Community consumption increased by 31 %. Furthermore, the Community industry showed a significant deterioration of its financial results, in particular from 1995 onwards. In the light of the foregoing analysis, the Commission has provision- ally concluded that the Community industry has suffered material injury within the meaning of Article 3(1) of the Basic Regulation. F. CAUSATION 1. Effect of the dumped imports (47) (48) (49) (e) Average sales price and price evolution (52) The weighted average prices of the product concerned sold by the Community industry on the Community market the period considered, overall increasing by 10 %. fluctuated over (f) Profitability The profitability of the Community industry, expressed as a percentage of net sales, decreased from a weighted average profit of 3,9 % in 1994 to 1,9 % in the investigation period, i. e. a decrease of 50 %. It should be noted, however, that the finan- cial situation deteriorated particularly from 1995 onwards, falling from a profit of 13,5 % to a profit of 1,9 % in the investigation period. (g) Investment Yearly investments made by the Community industry increased overall, going from ECU 1,07 million in 1994 to ECU 1,22 million in the invest- igation period, with a peak in 1996 of ECU 3,27 represents million. Although this an overall increase of 14 % over the period considered, investments have significantly decreased between 1996 and the investigation period. (h) Employment (50) Employment levels in the Community industry for the product concerned increased during the period considered. Employment rose from 557 in 1994 to in the 689 in 1995. Since 1995 employment the In its examination of whether the material injury suffered by the Community industry had been caused by the dumped imports, the Commission volume of dumped imports found that increased substantially between 1994 and the investigation period (210 %). It should be noted that, between 1994 and 1995, the volume of the into the Community almost dumped imports doubled and a further significant increase occurred between 1996 and the investigation period. This had the effect the cumulated total market share of imports from the exporting countries concerned increased from 13,1 % in 1994 to 31 % in the investigation period, i. e. by 17,9 percentage points. the Community industry’s market share decreased by 8,6 percentage points between 1994 and the investigation period. More- the Community over, industry lost 3,2 % in market share between 1996 and 1997 alone, which is the period during which the increase in imports from the exporting coun- tries concerned became particularly relevant. it should be noted that In contrast, that It is, furthermore, noted that the market for twine is price-sensitive and transparent. The Commission found that the product under investigation is to be considered as a commodity and that any downward pressure on prices tended to have an immediate impact on the market, the exporting producers and the Community industry sell their products to the same clients. In this context, the Commission found that the imports from the exporting countries concerned undercut the prices of the Community industry by between 3,8 and 21,4 % during the investigation period. in particular as 2. 10. 98 EN Official Journal of the European Communities L 267/15 In addition, over the whole period considered the prices of imports from the countries under invest- igation were consistently and significantly lower than those of the Community industry. As a result of this, the Community industry had to adjust its prices to the market situation in order to avoid losing market share. Furthermore, the prices from the dumped imports were found to be the lowest in the market during the investigation period. (53) The situation of the Community industry was at its worst, with reference in particular to profitability and market share, during the investigation period, when the volume of imports from the exporting countries concerned into the Community was most significant. Under the circumstances, it is concluded that the twines from the exporting dumped imports of countries concerned have caused material injury to the Community industry. 2. Other factors (a) Other imports (54) The effect of imports other than those from the exporting countries concerned on the situation of the Community industry was also examined on the basis of figures reported by Eurostat. (57) Imports from other countries not subject to the present investigations amounted to 2 043 tonnes during the investigation period, representing a total market share of 4 %, decreasing from a level of 4,6 % in 1994. During the investigation period, these imports were mainly from Costa Rica, USA, Slovenia, Turkey and Switzerland and, with the exception of imports from Costa Rica in 1996, were usually made at prices higher than those of the exporting countries concerned. As far as Costa Rica is concerned, prices of imports were found to be lower, in 1996, than those from the countries concerned and its market share amounted to 2,2 %. However, as its prices were higher its market share decreased to 1,4 %. in 1997, (58) In this context, it should be recalled that, during the investigation period, prices of the dumped imports were found to be the lowest on the market. Moreover, the volume of the dumped imports alone was substantial throughout the period considered and, during the investigation period, such imports were found to represent 89 % of total imports. It follows from the above that imports from coun- tries other than the four countries concerned cannot have broken the causal link between the dumped imports and the material injury suffered by the Community industry. (b) Development of consumption (55) Community consumption of twines increased in total by 31 % between 1994 and the investigation period, with a tendency to stabilise after 1996. The injury suffered by the Community industry cannot, therefore, be attributed to the trend in demand. (c) Export activity of the Community industry (56) During the under period investigation the Community industry’s exports of twines to third countries, in terms of volume, remained stable. The sales prices charged by the Community industry in the export market were substantially higher than those applied in the Community market. Sales prices increased by 22 % on the export market in comparison to 10 % on the Community market. Thus, the Community industry did not contribute to the injury suffered by the Community industry. the export activity of (d) Competitiveness of the Community industry to be put 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 in place. The Community industry, moreover, continued its efforts in research and development and in quality control throughout the period considered. During the period under investigation the Community industry decreased its SGA costs by 8 %. The Community industry there- fore improved its performance both in cost and in quality terms over the period considered. (e) Changes in the prices of raw material The Commission also considered whether the injury suffered by the Community industry could have been caused by fluctuations in the cost of raw materials during the period considered, during which significant fluctuations in the cost of raw materials were found. Both Community producers in the exporting countries and the producers concerned were to such fluctuations. Overall, the prices of polypropylene granulates, the main raw material used in the production of the increased by 39 % between product concerned, 1994 and the investigation period. Considering that this raw material accounts for approximately 55 % of the total cost of production, the average sales subject L 267/16 EN Official Journal of the European Communities 2. 10. 98 price charged by the Community industry should have increased by 21,5 % over the period con- sidered to cover the overall increase in raw material costs. This should be compared with an overall the Community increase in the sales prices of industry of 10 % and the significant undercutting margins found for imports from the exporting countries concerned, which made it impossible for the Community industry to pass on the full increase of raw material costs to their customers. 3. Conclusion (59) Given the fact that twine is a commodity-type product offered in a transparent market, and that the Community-produced imported product are sold through the same sales channels in the Community, the Commission considers that dumped imports of twines originating in the exporting countries concerned had a significant impact on the Community market. and the Although it cannot be excluded that certain imports from other third countries and variations in the cost of raw materials may have had a slight adverse effect on the situation of the Community industry, this does not detract from the fact that twines originating in the exporting imports of countries concerned, taken in isolation, caused material injury to the Community industry. share of This conclusion is drawn in particular from the loss of market the Community industry combined with a deterioration in profitability, coinciding with a significant increase in the volume and market share of dumped imports at the prices Community industry, and which were indeed at levels found to be the lowest on the market during the investigation period. that constantly undercut those of G. COMMUNITY INTEREST 1. Introduction (60) It has been further examined whether, despite the conclusions on dumping and injury caused thereby, compelling reasons exist which would lead to the conclusion that it is not in the Community interest to impose anti-dumping measures in this particular case. For this purpose, and pursuant to Article 21(1) of the Commission con- sidered the impact of measures for all parties the and involved consequences of not taking measures. the Basic Regulation, in the proceedings also In order to assess the likely impact of measures, the Commission requested information from all inter- the known parties ested Community industry, the importers/distributors and users of the product concerned. It is to be noted that the Commission received only limited including to it, and generic replies. The parties examined in the context of the present Community interest analysis fall into the following categories: the Community the importers/distributors and users. It industry, twines are sold in the should be noted that Community in their finished state, therefore no downstream processing such is concerned by these proceedings. industry as 2. Interests of the Community industry (a) Nature and structure of the Community industry (61) Community producers are spread over most Member States. A large concentration of companies is, however, to be found in Portugal. The Portu- guese producers accounted for approximately 60 % of the production of the Community industry in the investigation period. family-owned small- The Community industry is made up, for the most part, of to medium-sized companies. The Community industry essentially transforms the raw materials into twines through the following main production phases: an extrusion phase (the melting of the raw materials into useable film), a stranding phase (creating strands from the film) and a twisting or braiding phase (twisting or braiding the strands to make up the twine). (b) Viability of the Community industry viable. (62) Although the Community industry suffered finan- cial shortfalls, this does not mean that it is not the Community structurally Indeed, industry invested significantly throughout the period considered in new machinery, which enabled the introduction of more efficient produc- tion processes. The Community industry also invested in quality assurance and control and has undertaken important research and development efforts to introduce the production of new types of twines providing a higher 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 the Community industry is a reliable supplier. added value (c) Likely the non-imposition of measures effects of imposition or (63) If the pressure exerted by the dumped imports were allowed to continue further ü in particular in light of the significant increase in the market share of these imports ü the financial situation of the Community industry would continue to deteriorate. The Community industry would then not be able to finance its efforts in developing new products 2. 10. 98 EN Official Journal of the European Communities L 267/17 and over the longer-term company closures could follow. In this respect, it is noted that, in the course of the investigation period, as a consequence of the price pressure existing on the Community market during the period considered, one of the compla- inant Community producers stopped producing. It is very likely that, without measures to correct the effects of dumped imports, this negative trend will continue. Thus, the existence of the Community industry and 600 jobs, concentrated mainly in Portugal, may ultimately be at risk. 5. Consequence for competition in the Community market (67) As far as the competitive environment in the Community market is concerned, the level and nature of the measures are not such as to exclude from the Community market those exporting producers under investigation and therefore the measures will allow the continued presence of these exporting producers in the market. (64) (65) (66) The imposition of measures may allow the Community industry to regain part of the previ- ously held market share. Furthermore, the imposi- tion of measures should enable the Community industry to improve profitability. The imposition of anti-dumping measures would therefore be in the interest of the Community industry. (68) 3. Interests of the importers/distributors The distribution chain of the product concerned is characterised by a small number of importers/ distributors who hold significant levels of stocks of the product concerned. The importers/distributors generally act as intermediaries between the users (agricultural cooperatives and bale contractors) and both the Community industry and the exporting producers. As the importers/distributors are gener- ally free to determine the source of their supply (Community-produced or imported), the Commis- sion does not see that they would be significantly affected by the imposition or non-imposition of measures. Moreover, no evidence was submitted to the Commission that this would not be the case. 4. Interests of the users the impact of The users of the product concerned mainly consist of bale contractors or individual farmers. Given the the Commission the market, price-sensitivity of considers that the imposition of measures would in all likelihood take the form of a price increase. It should be noted that twines are only used for the production of bales and that the costs relating to twines are peripheral to the main costs incurred by the individual farmer or bale contractor, when compared to other costs such as the depreciation of the baler machines, fuel, insur- labour or maintenance. According to the ance, information available, the Commission considers that the product concerned represents only a negli- gible part of the overall costs of the individual farmer or bale contractor, which may explain the lack of cooperation by the users in the present proceedings. Any expected price increase as a result of the imposition of measures would, therefore, be marginal for the users. Thus, users will continue to benefit from a market driven by a high number of suppliers. 6. Conclusion The rate of increase of imports from the exporting countries concerned during the period considered, and the exporting producers’ behaviour on the Community market, i. e. constantly and signifi- cantly undercutting the prices of the Community industry, indicate that there is a likelihood, in the absence of measures, that this trend will continue and further aggravate the injury caused to the Community industry. The imposition of measures can be expected to assist the Community industry to improve profit- ability, 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. It is also expected that measures will enable the Community industry to take full advantage of the investments made in recent years to continue developing new products technology for new and specialised of higher applications. As regards the user industries, any expected price increase would have only a marginal impact. The Commission has concluded that, in the circumstances, there are no compelling reasons not to impose measures. H. PROVISIONAL MEASURES (69) On the basis of the conclusions on dumping and injury set out above, the Commission considered the level of the provisional measures to be adopted. For this purpose, account has been taken of the dumping margins found and of the amount of duty necessary to eliminate the injury sustained by the Community industry. 1. Injury elimination level (70) For the purpose of establishing the level of the provisional measures to be imposed, the Commis- sion considered that the dumped imports should be increased to a non-injurious the prices of L 267/18 EN Official Journal of the European Communities 2. 10. 98 level. The necessary price increase or injury margin was determined on the basis of a comparison of the weighted average export prices for those product types used in the determination of price undercut- ting at the cif Community frontier level, with the actual weighted average cost of production of the Community industry 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 takes the product concerned is considered by the interested parties as a commodity. account of that fact the The resulting amount necessary to remove the injury, or injury margin, was established for each of the exporting producers concerned as a result of this comparison and was expressed as a percentage of to the Community. the CIF value of exports their 2. Provisional duties (71) According to Article 7(2) of the Basic Regulation, the level of the provisional duty should be equal to the margin of dumping or the amount necessary to remove the injury, whichever is lower. For four exporting producers, the provisional duty is equal to the amount necessary to remove the injury, and for seven exporting producers, it is equal to the dumping margin. For the reasons set out in recitals 22, 29 and 34, the residual duty for the Czech Republic, Hungary and Saudi Arabia was set at the level of the highest margin found for a cooperating exporting producer in each country in question. For the reasons set out in recital 16, the residual duty for Poland was set at the level of the highest margin found for a representative type exported by a cooperating exporting producer in Poland. 3. Undertakings the undertakings offered by the exporting produ- cers concerned were acceptable. (73) (74) The Commission points out that in the event of a breach or withdrawal of the undertaking, an anti- dumping duty may be imposed, pursuant to Article 8(9) and (10) of the Basic Regulation. the Basic Regulation, Furthermore, it should be noted that, in accordance with Article 8(6) of the investigation of dumping, injury and Community interest will be completed, notwithstanding the acceptance of undertakings during the course of the investigation. I. FINAL PROVISION (75) In the interest of sound administration, a period should be fixed within which the parties concerned may make their views known in writing and request a hearing. Furthermore, it should be stated that all findings made for the purpose of this Regulation are provi- sional and may have to be reconsidered for the purpose of any definitive duty, which the Commis- sion may propose, HAS ADOPTED THIS REGULATION: Article 1 1. A provisional anti-dumping duty is hereby imposed on imports of polypropylene binder or baler twine, currently classifiable within CN code ex 5607 41 00 (TARIC code 5607 41 00*10), originating in Poland, the Czech Republic, Hungary and Saudi Arabia. (72) Certain exporting producers concerned by the to the proceedings offered price undertakings Commission, in accordance with Article 8(1) of the Basic Regulation. The Commission considered that 2. The rate of provisional duties applicable to the net the free-at-Community-frontier price of product concerned produced by the following companies, before duty, shall be as follows: imports of Country Company Poland BZLP Bezalin CZWC Chemitex PAT Defalin sa Industrial Chemistry Research Institute Terplast sp zo. o Others Provisional duty (%) TARIC additional code 20,1 22,7 16,3 12,8 7,7 30,6 8450 8568 8569 8578 8579 8900 2. 10. 98 EN Official Journal of the European Communities L 267/19 Country Company Czech Republic Lanex a. s. Others Hungary All companies Saudi Arabia All companies Provisional duty (%) TARIC additional code 24,8 24,9 32,9 3,9 8580 8900 8900 ü 3. Unless otherwise specified, the provisions in force concerning duties and other customs practices shall apply. The release for free circulation in the Community of the products referred to in 4. paragraph l shall be subject to the provision of a security, equivalent to the amount of the provisional duty. Article 2 1. Notwithstanding Article 1, the provisional duty shall not apply to imports of polypro- pylene binder or baler twine produced and directly exported or invoiced to an importing company in the Community by the companies specifically mentioned in paragraph 3, in respect of which the price undertakings offered are hereby accepted. 2. However, in the event of a breach of the undertaking during any given reporting period, i. e. quarter of a calendar year, all sales of that period shall be deemed to be not subject to the undertaking, and the rate of provisional duties applicable to the net free-at-Community-frontier price of imports of the product concerned, before duty, as set out in paragraph 3, shall apply. This shall not prejudice the right of the Community institutions to take any action warranted pursuant to Article 8(9) and (10) of Regulation (EC) No 384/96. Imports made within the context of the undertakings offered and accepted shall be 3. declared under the following TARIC additional codes: Country Company Hungary Partium ’70 Rt. Tiszai Vegyi Kombinat Rt. Elso Magyar Kenderfono Rt. Article 3 Provisional duty to be imposed in the event of a breach of the undertaking (%) TARIC additional code 12,1 26,4 32,9 8581 8582 8583 Pursuant to Article 20(1) of Regulation (EC) No 384/96 and without prejudice to Article 20(2) and (3) of that Regulation the interested parties which made themselves known within the time limit specified in the notice of initiation may make their views known in writing and apply to be heard by the Commission within one month of the date of entry into force of this Regulation. L 267/20 EN Official Journal of the European Communities 2. 10. 98 In accordance with the provisions of Article 21(4) of Regulation (EC) No 384/96, the parties concerned may provide comments on the application of this Regulation within one month of the date of its entry into force. Article 4 This Regulation shall enter into force on the day following its publication in the Official Journal of the European Communities. Article l shall apply for a period of six months. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 1 October 1998. For the Commission Leon BRITTAN Vice-President