(1)

By Regulation (EC) No 119/97 (2), the Council imposed a definitive anti-dumping duty ranging from 32,5 % to 39,4 % on imports of certain ring binder mechanisms (‘RBM’) originating in the People’s Republic of China (the ‘PRC’ or ‘country concerned’) and a definitive anti-dumping duty of 10,5 % on imports originating in Malaysia. These duty rates were applicable to RBM other than those with 17 or 23 rings, while RBM with 17 and 23 rings were subject to a duty equal to the difference between the minimum import price (MIP of EUR 325 per 1 000 pieces) and the free-at-Community-frontier not cleared through customs price, whenever the latter was lower than the MIP.

(2)

By Regulation (EC) No 2100/2000 (3), the Council increased the above mentioned duties for Chinese RBM other than those with 17 or 23 rings, following an anti-absorption investigation pursuant to Article 12 of the basic Regulation. The amended duties applicable to such imports from the PRC ranged from 51,2 % to 78,8 %.

(3)

Following an anti-circumvention investigation pursuant to Article 13 of the basic Regulation, by Regulation (EC) No 1208/2004 (4), the Council extended the definitive anti-dumping measures to imports of certain RBM consigned from Vietnam, whether declared as originating in Vietnam or not.

(4)

By Regulation (EC) No 2074/2004 (5) the Council extended the definitive anti-dumping measures on imports of RBM originating in the PRC following an expiry review. No request for an expiry review had been received concerning the measures applicable to Malaysia, which consequently expired in January 2002.

(5)

Following an anti-circumvention investigation pursuant to Article 13 of the basic Regulation, by Regulation (EC) No 33/2006 (6), the Council extended the definitive anti-dumping measures to imports of certain RBM consigned from Lao People’s Democratic Republic (‘Laos’), whether declared as originating in Laos or not.

(6)

By Regulation (EC) No 818/2008 (7) and as a result of an anti-circumvention investigation, the Council extended the scope of the measures to certain slightly modified RBM.

(7)

Following an expiry review, the anti-dumping duties on imports of certain RBM were extended for five years in February 2010 by Implementing Regulation of the Council (EU) No 157/2010 (8), and following another expiry review, for another five years in May 2016 by Implementing Regulation of the Council (EU) 2016/703 (9) (the ‘measures in force’).

(8)

The anti-dumping duties currently in force are 51,2 % for one exporting producer and 78,8 % for all other exporting producers.

(9)

Following the publication of a Notice of impending expiry of the measures in force (10), the Commission received a request for the initiation of an expiry review pursuant to Article 11(2) of the basic Regulation.

(10)

The request for review was lodged on 12 February 2021 by the Union producer Ring Alliance Ringbuchtechnik GmbH (‘the applicant’) representing more than 25 % of the total Union production of RBM. The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation or recurrence of dumping and injury to the Union industry.

(11)

Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review, on 11 May 2021 the Commission initiated an expiry review with regard to imports of RBM originating in the People’s Republic of China and extended to Vietnam and Lao People’s Democratic Republic on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (11) (‘the Notice of Initiation’).

(12)

The investigation of continuation or recurrence of dumping covered the period from 1 January 2020 to 31 December 2020 (‘the review investigation period’ or ‘RIP’). The examination of trends relevant for the assessment the likelihood of continuation or recurrence of injury covered the period from 1 January 2017 to the end of the review investigation period (‘the period considered’).

(13)

In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, the known exporting producers and the PRC authorities, known importers, users, traders, as well as associations known to be concerned about the initiation of the expiry review and invited them to participate.

(14)

Interested parties had an opportunity to comment on the initiation of the expiry review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. None of the interested parties requested a hearing.

(15)

In the Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 17 of the basic Regulation.

(16)

In the Notice of Initiation, the Commission stated that the three known Union producers, IML Industria Meccanica Lombarda SRL, Koloman Handler Fémárugyár Magyarország Kft and Ring Alliance Ringbuchtechnik GmbH., had to submit the completed questionnaire within 37 days of the date of publication of the Notice of Initiation. The Commission also invited other Union producers and representative associations, if any, to make themselves known and request a questionnaire. No other Union producer or representative association came forward.

(17)

To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation. No unrelated importers submitted the requested information. Consequently, the Commission decided that sampling was not necessary.

(18)

To decide whether sampling was necessary and if so, to select a sample, the Commission asked all exporting producers in the PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(19)

No exporting producers from the PRC provided the requested information and/or agreed to be included in the sample. Therefore, there was no cooperation from the Chinese producers and the findings with regard to the imports from the PRC are made on the basis of the facts available pursuant to Article 18 of the basic Regulation.

(20)

The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of the People’s Republic of China (‘GOC’).

(21)

The Commission sent the questionnaire to Union producers, unrelated importers and exporting producers. The same questionnaires were made available on DG Trade’s website (12) on the day of initiation.

(22)

Questionnaire replies were received from the Union producers Ring Alliance Ringbuchtechnik GmbH and Koloman Handler Kft., two parties belonging to the same group with one production facility and hereafter jointly referred to as ‘Ring Alliance Ringbuchtechnik GmbH’, and M.L. Industria Meccanica Lombarda S.r.l.

(23)

The Commission sought and verified all the information deemed necessary for the determination of likelihood of continuation or recurrence of dumping and injury and of the Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:

—

Ring Alliance Ringbuchtechnik GmbH, Oroszlany, Hungary,

—

I.M.L. Industria Meccanica Lombarda S.r.l., Offanengo, Italy.

(24)

The product under review is the same as in the previous expiry review, namely, certain ring binder mechanisms originating in the PRC, consisting of two steel sheets or wires with at least four half-rings made of steel wire fixed on them and which are kept together by a steel cover. They can be opened either by pulling the half rings or with a small steel trigger mechanism fixed to the ring binder mechanism (the product under review). RBM are falling at the entry into force of Regulation (EU) 2016/703 under CN code ex 8305 10 00 (TARIC codes 8305100011, 8305100013, 8305100019, 8305100021, 8305100023, 8305100029, 8305100034 and 8305100035).

(25)

RBM are used in a wide range of applications, for example, in the production of software manuals, catalogues and brochures, technical manuals, office files, as well as presentation and other bound files and photo and stamp albums.

(26)

A large number of different types of RBM were sold in the Union during the review investigation period. The differences between these types were determined by the width of the base, the type of mechanism, the number of rings, the opening system, the nominal paper holding capacity, the ring diameter, the shape of the rings, the length and the ring spacing. Given the fact that all types have the same basic physical and technical characteristics and, within certain ranges, are interchangeable, it was established that all RBM constitute one single product for the purpose of the present proceeding. No comments were received in that regard.

(27)

As shown in the investigation leading to the imposition of the measures in force (13), the following products have the same basic physical and technical characteristics as well as the same basic uses:

These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

(28)

During the review investigation period, imports of the product under review from the PRC continued albeit at a much lower level than in the previous expiry review (i.e. from January 2014 to December 2014). According to Comext (Eurostat) imports of ring binder mechanisms from the PRC accounted for about 0,7 % of the Union market in the review investigation period compared to 2,3 % market share during the previous expiry review.

(29)

As mentioned in recital (19), none of the exporters/producers from PRC cooperated in the investigation. Therefore, the Commission informed the GOC that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to the People’s Republic of China. The Commission did not receive any comments or requests for an intervention of the Hearing Officer in this regard.

(30)

Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available, in particular the information contained in the request for the expiry review, publicly available data for the two Turkish companies operating under NACE Rev2 code 2599, information provided by the applicant, information from the Turkish national statistics office, Eurostat’s Comext database, Global Trade Atlas, the OECD’s International Transport and Insurance Costs of Merchandise Trade (ITIC) website, the World Bank’s doing business website.

(31)

Given the sufficient evidence available at the initiation of the investigation tending to show, with regard to the PRC, the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission initiated the investigation on the basis of Article 2(6a) of the basic Regulation.

(32)

In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

(33)

In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the evidence available, it may need to select an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks. The Commission further stated that it would examine possible appropriate countries in accordance with the criteria set out in first indent of Article 2(6a) of the Basic regulation.

(34)

On 20 October 2021, the Commission informed by a note (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production (‘FOPs’) such as raw materials, labour and energy used in the production of the product under review. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Turkey as an appropriate representative country. The Commission received one comment from the applicant on the First Note.

(35)

On 7 February 2022, the Commission informed by a second note (‘the Second Note’) interested parties on the relevant sources it intended to use for the determination of the normal value, with Turkey as the representative country. It also informed interested parties of its intention to use the two Turkish companies, (D S C Otomotiv and Samet Kalip ve Madeni) who operate under NACE Rev2 code 2599 and produce products in the same general category as ring binder mechanisms as a basis to establish the SG&A and profit to construct normal value.

(36)

According to Article 2(1) of the basic Regulation, “the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country”.

(37)

However, according to Article 2(6a)(a) of the basic Regulation, “in case it is determined [….] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks”, and “shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits” (“administrative, selling and general costs” is refereed hereinafter as ‘SG&A’).

(38)

As further explained below, the Commission concluded in the present investigation that, based on the evidence available and in view of the lack of cooperation of the GOC and the exporting producers, the application of Article 2(6a) of the basic Regulation was appropriate.

(39)

In recent investigations concerning the steel sector in the PRC (14) – steel being the main factor of production for ring binder mechanisms – the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present. The Commission concluded in this investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was also appropriate.

(40)

In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles (15). In particular, the Commission concluded that in the steel sector, which is the main raw material to produce the product under review, not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation (16), but the GOC is also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation (17). The Commission further found that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being concentrated in sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces (18). Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC (19). In the same vein, the Commission found distortions of wage costs in the steel sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (20), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC (21).

(41)

The request contained information on the distortions in the steel sector, in particular it referred to the recent findings in the anti-dumping investigations lead by the European Commission which confirmed the existence of distortions in the steel sector. The request further contained information on distortions in the non-ferrous metal sector, in particular concerning nickel which is an important raw material for the manufacturing of the product under review. Moreover, the request referred to the Commission’s report on significant distortions in China (22) (‘Report’), emphasising in particular the distortions in the labour market and in access to finance.

(42)

In the present investigation, the Commission examined whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under review. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC.

(43)

Specifically in the steel sector, which is the main raw material to produce the product under review, a substantial degree of ownership by the GOC persists. Many of the largest steel producers are owned by the State. Some are specifically referred to in the ‘Steel Industry Adjustment and Upgrading Plan for 2016-2020’. For instance, the Chinese State-owned Shanxi Taiyuan Iron & Steel Co. Ltd. (‘Tisco’) mentions on its website that it is “a super iron and steel giant”, which “developed into an extraordinary large-scale iron and steel complex, which is integrated with business of iron mining, iron and steel production, processing, delivery and trading” (23). Baosteel is another major Chinese State-owned enterprise that engages in steel manufacturing and is part of the recently consolidated China Baowu Steel Group Co. Ltd. (formerly Baosteel Group and Wuhan Iron & Steel) (24) . While the nominal split between the number of SOEs and privately owned companies is estimated to be almost even, from the five Chinese steel producers ranked in the top 10 of the world’s largest steel producers, four are SOEs (25). At the same time, while the top ten producers only took up some 36 % of total industry output in 2016, the GOC set the target in the same year to consolidate 60 % to 70 % of steel production to around ten large-scale enterprises by 2025 (26). This intention has been repeated by the GOC in April 2019, announcing a release of guidelines on steel industry consolidation (27). Such consolidation may entail forced mergers of profitable private companies with underperforming SOEs (28).

(44)

In addition, in the steel sector, many of the largest producers are specifically referred to in the ‘Steel Industry Adjustment and Upgrading Plan for 2016-2020’. For instance, Tisco mentions on its website that it is “a super iron and steel giant”, which “developed into an extraordinary large-scale iron and steel complex, which is integrated with business of iron mining, iron and steel production, processing, delivery and trading” (29).

(45)

Since the RBM sector is very fragmented and most producers are SOEs, it was impossible to establish the exact ratio of state owned vs. privately owned RBM producers during the investigation.

(46)

With a high share of SOEs in the steel sector, the main raw material to produce ring binding mechanisms, even privately owned producers are prevented from operating under market conditions. Indeed, both public and privately owned enterprises in the RBM sector are also subject to policy supervision and guidance as set out in recitals (47) to (53) below.

(47)

As to the GOC being in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, the investigation did not look into individual companies, since the RBM sector is very fragmented and mostly consists of SMEs.

(48)

Furthermore, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the RBM sector.

(49)

The steel industry, which is the main component for the production of RBMs, is regarded as a key industry by the GOC (30). This is confirmed in the numerous plans, directives and other documents focused on steel, which are issued at national, regional and municipal level such as the ‘Steel Industry Adjustment and Upgrading Plan for 2016-2020’. This Plan states that the steel industry is “an important, fundamental sector of the Chinese economy, a national cornerstone” (31). The main tasks and objectives set out in this Plan cover all aspects of the development of the industry (32).

(50)

The 13th Five-Year Plan on Economic and Social Development (33) envisages support to enterprises producing high-end steel product types (34). It also focuses on achieving product quality, durability and reliability by supporting companies using technologies related to clean steel production, precision rolling and quality improvement (35).

(51)

The ‘Catalogue for Guiding Industry Restructuring (2011 Version) (2013 Amendment)’ (36) (‘the Catalogue’) lists steel as encouraged industry.

(52)

The GOC further guides the development of the sector in accordance with a broad range of policy tools and directives related to, inter alia, market composition and restructuring, raw materials, investment, capacity elimination, product range, relocation, upgrading, etc. Through these and other means, the GOC directs and controls virtually every aspect in the development and functioning of the sector (37). The current problem of overcapacity is arguably the clearest illustration of the implications of the GOC’s policies and the resulting distortions.

(53)

In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production of steel as the main raw material used in the manufacturing of the ring binder mechanisms. Such measures impede market forces from operating freely.

(54)

The present investigation has not revealed any evidence that the discriminatory application or inadequate enforcement of bankruptcy and property laws according to Article 2(6a)(b), fourth indent of the basic Regulation in the steel sector referred to above in recital (40) would not affect the manufacturers of RBM.

(55)

The RBM sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (40). Those distortion affect the sector both directly (when producing RBM or the main inputs), as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in the PRC) (38).

(56)

Moreover, no evidence was submitted in the present investigation demonstrating that the RBM sector is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred to above in recital (40). Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

(57)

Finally, the Commission recalls that in order to produce RBM, a number of inputs are needed. The PRC is one of the major producers of steel – the key raw material in the RBM production process. When the producers of RBM purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned above. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.

(58)

As a consequence, not only are the domestic sales prices of RBM not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth. No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

(59)

As indicated in recital (29), the GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file, including the Report and the additional evidence provided by the complainant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

(60)

In sum, the evidence available showed that prices or costs of the product under review, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section.

(61)

The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:

(62)

As explained in recitals (34) and (35), the Commission issued two notes for the file on the sources for the determination of the normal value: the first note on production factors of 20 October 2021 (the “First Note”) and the second note on production factors of 7 February 2022 (the “Second Note”). These notes described the facts and evidence underlying the relevant criteria, and addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Turkey as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

(63)

In the First Note on production factors, the Commission identified Turkey and Thailand as countries with a similar level of economic development as the PRC according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis where production of the product under review or of a product in the same general category and/or sector of the product under review was known to take place.

(64)

There was one comment received on the note from the applicant. The applicant agreed that both countries were classified as upper middle-income countries. However, the applicant, in its response to the first Note, stated that based on decades of manufacturing and selling the product under review, they had no knowledge of companies in Turkey and Thailand producing ring binder mechanisms. Moreover, the applicant maintained there was confusion between the production of ring binders, i.e. a downstream product, and ring binder mechanisms, i.e. the metal part of the binder. Concerning the companies presented by the Commission as producers in Turkey and Thailand, the applicant commented that all the companies listed in the Note of 20 October were stationery companies producing the downstream product. The applicant explained that, in the request for review, it had chosen Turkey due to its size and economic development, well aware of the absence of RBM production in Turkey. Therefore, it had proposed companies with similar production methods, FOP and manufacturing elements based on NACE Rev2 code 2599.

(65)

As all countries where there is production of the product under review have a different level of economic development than the PRC, the Commission indicated it would use the production of a product in the same general product category, NACE Rev2 code 2599, to the product under review, to establish an appropriate representative country for the application of Article 2(6a) of the basic Regulation.

(66)

For the countries considered and mentioned above, the Commission further verified the availability of the public data, and in particular public financial data from the producers in the general category of NACE Rev2 code 2599.

(67)

The Commission further investigated the publicly available financial data of the companies identified by the applicant (NACE Rev2 code 2599). Though there are no products under review produced by these companies, they use similar FOPs in their manufacturing processes. The Commission found that only two of the six companies identified operated under the NACE Rev2 code 2599, namely D S C Otomotiv and Samet Kalip ve Madeni, both in Turkey. The Commission found that the two identified companies were profitable in the review investigation period. The comparatively high levels of SG&A and profit when using the weighted average of the two companies can be explained by the fact that both of these companies are major producers in their respective sectors. D S C Otomotiv supplies the automobile sector, while Samet Kalip is a major player in the global market of the furniture accessory industry. In any event, the Commission has not obtained any information suggesting that the levels of SG&A and profit of D S C Otomotiv and Samet Kalip would not be reasonable for the sector in which they operate.

(68)

The Commission also analysed the imports of the main factors of production into Turkey. The analysis of import data showed that the imports into Turkey of the major factors of production were not materially affected by imports from the PRC or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council (41) and therefore Turkey could be used as an appropriate representative country.

(69)

In the light of the above considerations, the Commission informed the interested parties with the Second Note that it intended to use Turkey as an appropriate representative country, in accordance with Article 2(6a)(a), first indent of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value.

(70)

Interested parties were invited to comment on the appropriateness of Turkey as a representative country. No comments were received.

(71)

The initial selection of potential representative countries and of suitable companies with publicly available data does not prevent the Commission from supplementing or refining its selection and its research at a later stage, including by putting forward new suggestions in terms of potential representative countries. Indeed it is the very purpose of the Notes on factors of production to invite interested parties to comment on the Commission services’ preliminary research and, if warranted, to receive alternatives for the Commission services’ further consideration. The Notes contain a specific annex to guide parties in submitting information on possible additional representative countries and/or companies for the purpose of Article 2(6a)(a) of the basic Regulation.

(72)

Having established that Turkey was an appropriate representative country, based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.

(73)

In view of the above analysis, Turkey met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

(74)

In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under review by the exporting producers and invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production mentioned in that note.

(75)

Subsequently, in the Second Note, the Commission stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use Global Trade Atlas (‘GTA’) to establish the undistorted cost of most of the factors of production, notably the raw materials and by-products. In addition, the Commission stated that it would use the National Statistics Office of Turkey (42) for establishing undistorted costs of labour and energy.

(76)

The Commission included in the calculation a value of manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. To establish this amount, it made use of the financial data of one of the Union producers that cooperated in the investigation and that provided specific information for that purpose (43), Koloman Handler Kft (‘KH’). The methodology is duly explained in Section 3.3.5.

(77)

Finally, as stated in the second Note, the Commission used the financial data from the selected Turkish companies mentioned in recital (67) to establish SG&A costs and profit.

(78)

Through the two notes on production factors, the Commission sought to establish a list of factors of production and sources intended to be used to establish a full list of inputs such as materials, energy and labour used in the production of the product under review by the producers in the PRC. The Commission did not receive any comments concerning the list of factors of production.

(79)

In the absence of cooperation by the Chinese exporting producers in the review procedure, the Commission had to rely on the European producer KH in order to establish the factors of production used in the production of RBM. Based on data collected from the Chinese companies in the original investigation and information available on the websites of the Chinese RBM producers, their production process and the materials used appear to be similar to the ones provided by KH.

(80)

In the absence of cooperation, the Commission did not have more detailed commodity codes for each factor of production than 6-digit Harmonised System (‘HS’) codes.

(81)

Considering all the information submitted by KH and the absence of comments on the two notes on the sources for determination of the normal value concerning the factors of production, the following factors of production and HS codes, where applicable, have been identified:

Factors of production of RBM

(82)

In order to establish undistorted prices of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis, for each raw material used in the production of RBM by KH, the weighted average import price to the representative country as reported in the GTA to which import duties and transport costs were added. The Commission verified the reported raw materials used and the relevant consumption ratios in the manufacturing of the product under review. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex I to Regulation (EU) 2015/755 (44). The data on imports statistics remained sufficiently representative after the exclusion of these imports. The Commission decided to exclude imports from the PRC into the representative country as it concluded in recital (60) that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices.

(83)

In order to establish the undistorted price of raw materials, delivered at the gate of the producer’s factory the Commission applied the import duty of the representative country, at the respective levels, depending on the country of origin of the imported volumes (45). The Commission added domestic transport cost calculated per kg on the basis of quotations for Istanbul-Kapikule border deliveries, as provided by the World Bank Doing Business Report (46).

(84)

In the absence of cooperation by Chinese exporting producers in the review procedure, the Commission relied on the data provided by KH in order to specify by-products obtained in in the production of RBM. The company reported only one by-product: waste and scrap of tinned iron or steel.

(85)

In the absence of imports of the above item in Turkey, the Commission looked for an alternative benchmark source. On the basis of an extraction from the GTA, the Commission identified the biggest world exporter of the product in question – the United States of America (‘USA’). The benchmark was subsequently calculated as the weighted average unit export landed price (CIF + import duties in the countries with US imports) based on the USA’s exports to the rest of the world in the review investigation period.

(86)

To establish the benchmark for labour costs, the Commission used publicly available Turkish national statistics, which includes employers’ taxes and levies (47).

(87)

The Commission used as a basis for calculation statistics from the Turkstat Data Portal, which provided detailed information hourly labour cost in different economic sectors by year. The Commission used as a benchmark figure reported for the NACE Rev2 code C.25 “Manufacture of fabricated metal products, except machinery and equipment”.

(88)

To establish the benchmark for electricity, the Commission used the industry’s electricity prices by consumption bands published on the website of the Turkish National Statistics Office (‘Turkstat’) (48).

(89)

The Commission used the quotation of the electricity price available in the Turkstat Data Portal, which provides half-year averages electricity unit prices. The Commission used as a benchmark an average of the industrial rates provided for the review investigation period.

(90)

According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

(91)

Further to the factors of production in recital (81) above, the Commission calculated manufacturing overhead costs. In view of the lack of cooperation from the Chinese producers, the calculation of these manufacturing overhead costs was based on the ratio of manufacturing overhead divided by the cost of manufacturing reported by KH. This percentage was applied to the undistorted costs of manufacturing.

(92)

For SG&A and profit, the Commission used the financial data of the two Turkish producers listed in recital (67). The Commission first determined the percentage of SG&A and profit over the costs of goods sold (‘COGS’) for each producer. Then, an average SG&A and profit in the representative country (weighted by the companies’ turnover) was established. Publicly available audited accounts of these companies were made available to the interested parties as an attachment to the Second Note.

(93)

On the basis of the above benchmarks, the Commission constructed the normal value according to the following methodology.

(94)

First, the Commission established the undistorted manufacturing costs. In the absence of cooperation by the exporting producers, the Commission relied on the information provided by KH on the consumption of each factor of production (raw-materials, labour and energy) for the production of the product under review. These consumption volumes were multiplied by the undistorted costs per unit established in Turkey, as described in Section 3.3.4.

(95)

Second, to arrive to the undistorted costs of production, the Commission added the percentage of the manufacturing overheads determined as described in recital (90) to the undistorted costs of manufacturing.

(96)

Finally, in addition to the cost of production established as described in recital (95), the Commission applied the SG&A and profit in the representative country established as explained in recital (92). The SG&A and profit expressed as a percentage of COGS and applied to the undistorted costs of production amounted to 31,3 % and 24,7 % respectively.

(97)

The normal value, calculated as described in recitals (93) to (96), was reduced by the undistorted value of the by-product. Undistorted value of the by-product was established by multiplying the quantity sold in the review investigation period, as reported by KH, by its undistorted price per unit as established in Turkey, as described in section 3.3.4.2 above.

(98)

For certain products, the PRC applies a policy of reimbursing VAT only partially upon export. To ensure that the normal value is expressed at the same level of taxation as the export price, the normal value is adjusted upward by the part of VAT charged on exports of the product under review that was not refunded to the Chinese exporting producers. Data from the Chinese tax and custom administration website and data of Transcustoms (49) indicated that in the review investigation period, the VAT charged on exports of RBM was not fully refunded. The final normal value was therefore adjusted upward by 3 % accordingly.

(99)

On that basis, the Commission constructed the normal value on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. Due to the fact that no exporting producer cooperated, the normal value is applicable on a countrywide basis.

(100)

In the absence of cooperation of Chinese exporting producers, the export price was determined on the basis of facts available in accordance with Article 18 of the basic Regulation.

(101)

Only 356 thousand pieces of RBM were imported from the PRC during the review investigation period according to Eurostat. This amount is negligible not only in light of total Union consumption, but also since, as explained in recital (26), a large number of different types of RBM were sold in the Union during the review investigation period. In the absence of cooperation from Chinese exporting producers, the Commission has no indication of the product mix within such small volumes of imports. For these reasons, the Commission concluded that these low volumes do not provide a sufficient basis for a finding on continuation of dumping and examined the likelihood of recurrence of dumping should the measures be allowed to lapse.

(102)

Further to the conclusion of recital (101), the Commission investigated, in accordance with Article 11(2) of the basic Regulation, the likelihood of recurrence of dumping should the measures be repealed. The following elements were analysed: the existence of dumping based on exports to third countries, the production capacity and spare capacity in the PRC and the attractiveness of the Union market.

(103)

Based on GTA imports statistics, the Commission identified four biggest importers of the RBM from the PRC during the review investigation period: Mexico, the USA, Malaysia and Vietnam (50). These four countries accounted for 61 % of the total “world” imports of the product under review from China.

(104)

With regard to Chinese exports of RBM to these four main markets, dumping calculations were made following the methodology described below.

(105)

To assess dumping from the PRC to third countries, the Commission used the normal value constructed as described in recitals (93) to (99).

(106)

As there was no cooperation from the Chinese producers, the likely export price to the Union was estimated by analysing Chinese export prices to third countries in the review investigation period, based on the relevant country specific GTA import statistics.

(107)

Malaysia and Vietnam reported their import values only at CIF level. Therefore, the Commission adjusted the reported values to FOB level by deducting sea freight and insurance cost (51). This adjustment was not necessary for Mexico and the USA as imports values at FOB level were available.

(108)

In the second step FOB import values of all the four countries were adjusted to the ex-work level by deducting domestic transport cost in China (52).

(109)

The Commission compared the constructed normal value and the export prices to the third countries on an ex-work basis.

(110)

The above comparison showed countrywide dumping margins for the Chinese exports to the four countries, expressed as a percentage of their respective CIF values (53) as follows:

(111)

The average export price found during the review investigation period for each of the above countries would lead to a dumping margin of more than 20 % when compared to the normal value established in in section 3.3.6. This indicates that, if imports from the PRC would arrive in the Union at that level, such imports would be dumped.

(112)

Spare capacity in China, estimated at 375 million pieces according to the expiry review request, exceeds more than 7 times the total Union consumption of 40 million pieces – 60 million pieces during the review investigation period. Chinese capacity has been built up dramatically over the last decade, currently standing around 830 million pieces, which is well beyond its present output of 455 million pieces.

(113)

Based on the above, the Commission concluded that the Chinese exporting producers have significant spare capacities, which they could use to produce RBM to export to the Union if the measures were allowed to lapse.

(114)

According to the GTA data, the Chinese exporting producers exported to their main third markets at prices which were 1,2 % to 32,5 % lower as compared to the average sales prices of the Union producers on the Union market. Taking into account this price level, exporting to the Union is potentially attractive for the Chinese exporters, as the expiry of the measures would allow them to sell at prices higher than those at which they export to other countries but still below the EU industry prices.

(115)

The Union market is also attractive to the Chinese producers in view of its size, as it is the largest market globally for some types of RBM according to the expiry review request.

(116)

In view of the above, the Commission concluded that there is a strong likelihood that dumping would recur if the current measures were allowed to lapse. In particular, the level of the normal value established in the PRC, the level of Chinese export prices to third country markets, the attractiveness of the Union market and the availability of significant production capacity in the PRC all point to a strong likelihood of recurrence of dumping in case the current measures would be allowed to lapse.

(117)

The like product was manufactured by two producers in the Union during the investigation period: Ring Alliance Ringbuchtechnik GmbH (Oroszlany, Hungary) and I.M.L. Industria Meccanica Lombarda S.r.l. (Offanengo, Italy). They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

(118)

Both producers (the first of them being the applicant) have cooperated in the investigation. Since both companies together represented the total Union production of RBM in the review investigation period, they are considered to represent the Union industry within the meaning of Article 4(1) of the basic Regulation.

(119)

The total Union production during the review investigation period was established at around [40 000 – 60 000] pieces (54). The Commission established the figure on the basis of the questionnaire replies of the two producers. Because the micro- and macroeconomic figures were established on the basis of the data of two Union producers, the data was provided in ranges to ensure confidentiality.

(120)

The Commission established the Union consumption on the basis of (a) the verified sales volumes of the like product by the Union industry into the Union market reported in the respective questionnaire replies of the Union producers, and (b) import volumes of RMBs (TARIC level) into the Union market reported in Eurostat and converted into pieces. Within the TARIC nomenclature valid at the entry into force of Regulation (EU) 2016/703, the Commission identified two groups of RBM:

(121)

In Eurostat, the unit of measurement for RBM is weight (KG). The Commission calculated a conversion factor for each of the above groups of RBM, on the basis of the verified production data of the Union industry. It used the conversion factors thus calculated to establish the relevant import volumes in pieces.

(122)

The calculation of these conversion factors was duly explained in a note for the file (55). In that note the Commission provided the source of the data it used to calculate the two conversion factors (Union industry sales figures for the review investigation period submitted in weight and unit) and the methodology applied (total weight of each product group’s Union sales divided by the corresponding number of pieces). No comments were received in respect of this note for the file.

(123)

Union consumption developed as follows:

Table 1

Consumption in Union market

(124)

The review showed that Union consumption of RBM declined by 31 % over the period considered from around 70 – 90 million pieces in 2017 to 40 – 60 million pieces in the review investigation period (56).

(125)

The continued decline of the Union consumption is explained by digitalisation. However, the Union industry believes that the impact of digitalisation is in its last phase and that the market will gradually stabilize, especially for the main markets, i.e. the school market and the samples market. Moreover, the COVID-19 outbreak in 2020 resulted in an additional temporary decrease of demand in that year.

(126)

The Commission established the volume of imports on the basis of Eurostat statistics, as duly explained in recital (120) above. Its market share was established by comparing imports to the Union consumption as set out in table 1.

(127)

Imports from the country concerned developed as follows:

Table 2

Import volume and market share

(128)

The volume of imports of RBM originating in the PRC remained at a very low level throughout the period considered and fluctuated around a market share of 1 %.

(129)

Since there was no cooperation from exporting producers in the PRC, and in view of the very low quantities imported in the Union from the PRC as explained in recital (101), no reliable import prices could be established during the review investigation period and therefore it was not possible to perform a meaningful calculation of price undercutting.

(130)

Under these circumstances, the Commission determined the price undercutting by imports from the PRC during the review investigation period by comparing:

(131)

The result of the comparison was expressed as a percentage of the Union producers’ turnover during the review investigation period. It showed undercutting of up to 32,5 % depending on the prices to the main export markets used. Similar levels of undercutting on the Union market are expected should the measures be allowed to lapse.

(132)

The Commission established the volumes and prices of imports applying the same methodology as for the PRC (see recital (126)).

(133)

The volume of imports from third countries developed over the period considered as follows:

Table 3

Imports from third countries

(134)

During the whole period considered the main exporting countries of RBM to the Union were India and Cambodia. Imports from these countries held significant shares of the Union market over the whole period considered, ranging between 10 % and 16 %. It should however also be noted that the volumes and market share of imports from India and Cambodia strongly decreased over the period considered. Prices of such imports also decreased, and the Union industry has not provided any evidence that such imports are dumped on the Union market.

(135)

The imports from the other third countries are negligible. Thailand, once the second largest exporter to the Union, almost disappeared from the market.

(136)

In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(137)

As mentioned in recital (16), no sampling was used for the determination of possible injury suffered by the Union industry. Consequently, for the injury determination, the Commission did not distinguish between macroeconomic and microeconomic injury indicators because all the Union producers cooperated in the review.

(138)

In order to respect confidential business information, it has been necessary to present information concerning the two Union producers in ranges. Presenting the exact figures would allow either Union producer to calculate the exact production figures of the other producer, and there would be a risk that other market operators possessing market data would be able to do so likewise.

(139)

The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 4

Production, production capacity and capacity utilisation