Proposal for a Council Regulation (EC) amending Regulation (EC) No 384/96 on protection against dumped imports from countries not members of the European Community (98/C 70/11) COM(97) 677 final - 97/0368(ACC)

(Submitted by the Commission on 19 December 1997)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 113 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas by Regulation (EC) No 384/96 ('the basic anti-dumping Regulation`) the Council has adopted common rules for protection against dumped imports from countries which are not members of the European Community;

Whereas by Regulation (EC) No 519/94 the Council has adopted common rules for imports for certain third countries which are listed in its Annex I;

Whereas Article 2(7) of Council Regulation (EC) No 384/96 prescribes that, in the case of imports from non-market economy countries and, in particular those countries to which Regulation (EC) No 519/94 applies, normal value shall be determined on the basis of the price or constructed value in an analogue market economy third country;

Whereas the process of reform in Russia and the People's Republic of China has fundamentally altered their economies and has led to the emergence of firms or sectors where market economy rules prevail; both countries have as a result moved away from the economic circumstances which inspired the use of the analogue country method;

Whereas is it appropriate to revise the Community's anti-dumping practice in order to be able to take account of the changed economic conditions in Russia and in the People's Republic of China; in particular, it is appropriate to specify that normal value may be determined in accordance with the rules applicable to market economy countries in cases where it can be shown that market conditions prevail for one or more producers subject to investigation in relation to the manufacture and sale of the product concerned;

Whereas it is appropriate to specify that an examination of whether market conditions prevail will be carried out on the basis of properly substantiated claims by one or more producers subject to investigation who wish to avail themselves of the possibility of having normal value determined on the basis of rules applicable to market economy countries;

Whereas, in order to introduce the revised practice without affecting the common rules for imports in respect of Russia and the People's Republic of China, it is appropriate to remove from Article 2(7) of the basic anti-dumping Regulation the reference to the list of countries attached to Regulation (EC) No 519/94, and to add instead, in a footnote, the revised list of the countries concerned,

HAS ADOPTED THIS REGULATION:

Article 1

Article 2(7) of Regulation (EC) No 384/96 shall be amended as follows:

'(a) In the case of imports from non-market economy countries (¹), normal value shall be determined on the basis of the price or constructed value in a market economy third country, or the price from such a third country to other countries, including the Community, or where those are not possible, on any other reasonable basis, including the price actually paid or payable in the Community for the like product, duly adjusted if necessary to include a reasonable profit margin.

An appropriate market economy third country shall be selected in a not unreasonable manner, due account being taken of any reliable information made available at the time of selection. Account shall also be taken of time limits; where appropriate, a market economy third country which is subject to the same investigation shall be used.

The parties to the investigation shall be informed shortly after its initiation of the market economy third country envisaged and shall be given 10 days to comment.

(b) In anti-dumping investigations concerning imports from the Russian Federation and the People's Republic of China, normal value will be determined in accordance with paragraphs 1 to 6, if it is shown, on the basis of properly substantiated claims by one or more producers subject to the investigation and in the light of the criteria contained in Annex I to this Regulation, that market economy conditions prevail for this producer or producers in respect of the manufacture and sale of the like product concerned. When this is not the case, the rules set out under subparagraph (a) shall apply.

(¹) Including Albania, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, North Korea, Kyrgyzstan, Moldova, Mongolia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Vietnam.`

Article 2

This Regulation shall enter into force on . . . It shall apply to all anti-dumping investigations initiated after the date of its entry into force.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX

Criteria to be applied in deciding whether domestic prices and costs should be used in anti-dumping proceedings involving former NMEs

Decisions as to whether, or to what extent, domestic prices and costs in former NME countries can serve as the basis for determining normal value in anti-dumping investigations shall be based on the following criteria:

- Decisions of firms regarding prices, costs and inputs, including for instance raw materials, cost of technology and labour, output and investment, are made in response to market signals reflecting supply and demand, and without significant state interference in this regard; costs of major inputs substantially reflect market values.

- Firms have one clear set of basic accounting records which are in line with adequately supervised international accounting standards and are applied for all purposes.

- The production costs and financial situation of firms are not subject to significant distortions carried over from the former non-market economy system, in particular in relation to depreciation of assets, other write-offs, barter trade and payment via compensation of debts.

- The firms concerned are assured of appropriate application of bankruptcy laws and of property laws which guarantee legal certainty and stability for the operation of firms.

- Exchange rate conversions are carried out at the market rate.