(1)

The transition to a low-carbon, more sustainable, resource-efficient and circular economy in line with the Sustainable Development Goals is key to ensuring the long-term competitiveness of the economy of the Union. In 2016, the Union concluded the Paris Agreement (2). Article 2(1), point (c), of the Paris Agreement sets out the objective of strengthening the response to climate change by, among others, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

(2)

Recognising that challenge, the Commission presented the European Green Deal (3) in December 2019. The Green Deal represents a new growth strategy that aims to transform the Union into a fair and prosperous society with a modern, resource-efficient and competitive economy where there are no net greenhouse gas emissions from 2050 onwards and where economic growth is decoupled from resource use. That objective requires that clear signals are given to investors with regard to their investments to avoid stranded assets and to raise sustainable finance.

(3)

In March 2018, the Commission published its Action Plan ‘Financing Sustainable Growth’ (4), setting up an ambitious and comprehensive strategy on sustainable finance. One of the objectives set out in the Action Plan is to reorient capital flows towards sustainable investments to achieve sustainable and inclusive growth. The impact assessment underpinning subsequent legislative initiatives published in May 2018 (5) demonstrated the need to clarify that sustainability factors should be taken into account by investment firms as part of their duties towards clients and potential clients. Investment firms should therefore consider not only all relevant financial risks on an ongoing basis, but also all relevant sustainability risks as referred to in Regulation (EU) 2019/2088 of the European Parliament and of the Council (6) that, where they occur, could cause an actual or potential material negative impact on the value of an investment. Commission Delegated Regulation (EU) 2017/565 (7) does not explicitly refer to sustainability risks. For that reason and to ensure that internal procedures and organisational arrangements are properly implemented and adhered to, it is necessary to clarify that processes, systems and internal controls of investment firms should reflect sustainability risks, and that technical capacity and knowledge is necessary to analyse those risks.

(4)

To maintain a high standard of investor protection, investment firms should, when identifying the types of conflicts of interest the existence of which may damage the interests of a client or potential client, include those types of conflicts of interest that stem from the integration of the client’s sustainability preferences For existing clients, for whom a suitability assessment has already been undertaken, investment firms should have the possibility to identify the client’s individual sustainability preferences at the next regular update of the existing suitability assessment.

(5)

Investment firms that provide investment advice and portfolio management should be able to recommend suitable financial instruments to their clients and potential clients and should therefore be able to ask questions to identify a client’s individual sustainability preferences. In accordance with an investment firm’s obligation to act in the best interest of its clients, recommendations to clients and potential clients should reflect both the financial objectives and any sustainability preferences expressed by those clients. It is therefore necessary to clarify that investment firms should have in place appropriate arrangements to ensure that the inclusion of sustainability factors in the advisory process and portfolio management does not lead to mis-selling practices or to the misrepresentation of financial instruments or strategies as fulfilling sustainability preferences where they do not. In order to avoid such practices or misrepresentations, investment firms providing investment advice should first assess a client’s or potential client’s other investment objectives, time horizon and individual circumstances, before asking for his or her potential sustainability preferences.

(6)

Financial instruments with various degrees of sustainability-related ambition have been developed so far. To enable clients or potential clients to understand those different degrees of sustainability and take informed investment decisions in terms of sustainability, investment firms that provide investment advice and portfolio management services should explain the distinction between, on the one hand, financial instruments that pursue, fully or in part, sustainable investments in economic activities that qualify as environmentally sustainable under Regulation (EU) 2020/852 of the European Parliament and of the Council (8), sustainable investments as defined in Article 2, point (17), of Regulation (EU) 2019/2088, and financial instruments that consider principal adverse impacts on sustainability factors that might be eligible for recommendation as meeting individual sustainability preferences of clients, and, on the other hand, other financial instruments without those specific features that should not be eligible for recommendation to the clients or potential clients that have individual sustainability preferences.

(7)

It is necessary to address concerns about ‘greenwashing’, that is, in particular, the practice of gaining an unfair competitive advantage by recommending a financial instrument as environmentally friendly or sustainable, when in fact that financial instrument does not meet basic environmental or other sustainability-related standards. In order to prevent mis-selling and greenwashing, investment firms should not recommend or decide to trade financial instruments as meeting individual sustainability preferences where those financial instruments do not meet those preferences. Investment firms should explain to their clients or potential clients the reasons for not doing so, and keep records of those reasons.

(8)

It is necessary to clarify that financial instruments that are not eligible for individual sustainability preferences can still be recommended by investment firms, but not as meeting individual sustainability preferences. In order to allow for further recommendations to clients or potential clients, where financial instruments do not meet a client’s sustainability preferences, the client should have the possibility to adapt information on his or her sustainability preferences. In order to prevent mis-selling and greenwashing, investment firms should keep records of the client’s decision along with the client’s explanation supporting the adaptation.

(9)

Delegated Regulation (EU) 2017/565 should therefore be amended accordingly.

(10)

Competent authorities and investment firms should be given sufficient time to adapt to the new requirements contained in this Regulation. Its application should therefore be deferred,

(1)

Errors appeared in Article 1(1) of Commission Delegated Regulation (EU) 2017/565 (2) as it was requiring the application of Article 59(4), Article 60 and Chapter IV of that Regulation, instead of Article 64(4), Article 65 and Chapter VIII.

(2)

Errors appeared in several cross-references in Annex I to Delegated Regulation (EU) 2017/565, more precisely under ‘Client assessment’, ‘Order handling’, ‘Client order and transactions’, ‘Reporting to clients’, ‘Communication with clients’ and ‘Organisational requirements’.

(3)

Delegated Regulation (EU) 2017/565 should therefore be corrected accordingly,

(1)

The transition to a low-carbon, more sustainable, resource-efficient and circular economy in line with the Sustainable Development Goals is key to ensuring the long-term competitiveness of the economy of the Union. In 2016, the Union concluded the Paris Agreement (2). Article 2(1), point (c) of the Paris Agreement sets out the objective of strengthening the response to climate change by, among others means, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

(2)

Recognising that challenge, the Commission presented the European Green Deal (3) in December 2019. That Green Deal represents a new growth strategy that aims to transform the Union into a fair and prosperous society with a modern, resource-efficient and competitive economy where there are no net greenhouse gas emissions from 2050 onwards and where economic growth is decoupled from resource use. That objective requires that clear signals are given to investors with regard to their investments to avoid stranded assets and to raise sustainable finance.

(3)

In March 2018, the Commission published its Action Plan ‘Financing Sustainable Growth’ (4), setting up an ambitious and comprehensive strategy on sustainable finance. One of the objectives set out in the Action Plan is to reorient capital flows towards sustainable investments to achieve sustainable and inclusive growth. The impact assessment underpinning subsequent legislative initiatives published in May 2018 (5) demonstrated the need to clarify that sustainability factors should be taken into account by Alternative Investment Fund Managers (‘AIFMs’) as part of their duties towards investors. AIFMs should therefore assess not only all relevant financial risks on an ongoing basis, but also all relevant sustainability risks as referred to in Regulation (EU) 2019/2088 of the European Parliament and of the Council (6) that, where they occur, could cause an actual or potential material negative impact on the value of an investment. Commission Delegated Regulation (EU) No 231/2013 (7) does not explicitly refer to sustainability risks. For that reason and to ensure that internal procedures and organisational arrangements are properly implemented and adhered to, it is necessary to clarify that processes, systems and internal controls of AIFMs reflect sustainability risks, and that technical capacity and knowledge is necessary to analyse those risks.

(4)

Pursuant to Regulation (EU) 2019/2088 AIFMs that are obliged to consider principal adverse impacts of investment decisions on sustainability factors, or consider those principal adverse impacts voluntarily, are obliged to disclose how their due diligence policies take those principal adverse impacts into account. To ensure consistency between Regulation (EU) 2019/2088 and Delegated Regulation (EU) No 231/2013, that obligation should be reflected in Delegated Regulation (EU) No 231/2013.

(5)

To maintain a high standard of investor protection, AIFMs should, when identifying the types of conflicts of interest the existence of which may damage the interests of an AIF, include conflicts of interest that may arise as a result of the integration of sustainability risks in their processes, systems and internal controls. Those conflicts may include conflicts arising from remuneration or personal transactions of relevant staff, conflicts of interest that could give rise to greenwashing, mis-selling or misrepresentation of investment strategies and conflicts of interests between different AIFs managed by the same AIFM.

(6)

Delegated Regulation (EU) No 231/2013 should therefore be amended accordingly.

(7)

Competent authorities and AIFMs should be given sufficient time to adapt to the new requirements contained in this Regulation. Its application should therefore be deferred,

(1)

The transition to a low-carbon, more sustainable, resource-efficient and circular economy in line with the Sustainable Development Goals is key to ensuring the long-term competitiveness of the economy of the Union. In 2016, the Union concluded the Paris Agreement (2). Article 2(1), point (c), of the Paris Agreement sets out the objective of strengthening the response to climate change by, among others, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

(2)

Recognising that challenge, the Commission presented the European Green Deal (3) in December 2019. That Green Deal represents a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net greenhouse gas emissions in 2050 and where economic growth is decoupled from resource use. This also requires offering clear, long-term signals to guide investors, to avoid stranded assets and to raise sustainable finance.

(3)

In March 2018, the Commission published its Action Plan ‘Financing Sustainable Growth’ (4), setting up an ambitious and comprehensive strategy on sustainable finance. One of the objectives set out in that Action Plan is to reorient capital flows towards sustainable investment to achieve sustainable and inclusive growth. The impact assessment underpinning subsequent legislative initiatives published in May 2018 (5) demonstrated the need to clarify that sustainability factors should be taken into account by insurance and reinsurance undertakings as part of their duties towards policyholders. Insurance and reinsurance undertakings should therefore assess not only all relevant financial risks on an ongoing basis, but also all relevant sustainability risks as referred to in Regulation (EU) 2019/2088 of the European Parliament and of the Council (6) that, where they occur, could cause an actual or potential material negative impact on the value of an investment or a liability. Commission Delegated Regulation (EU) 2015/35 (7) does not explicitly refer to sustainability risks. For that reason and to ensure that the system of governance is properly implemented and adhered to, it is necessary to clarify that the system of governance of insurance and reinsurance undertakings and the assessment of those undertakings’ overall solvency needs should reflect sustainability risks.

(4)

Insurance undertakings that disclose principal adverse impacts on sustainability factors in accordance with Regulation (EU) 2019/2088 should also adapt their processes, systems and internal controls with respect to those disclosures.

(5)

Given the ambitions of the Commission to ensure that climate and environmental risk are managed and integrated into the financial system and the importance of remuneration policies in ensuring that the staff of insurance and reinsurance undertakings effectively manage risks identified by the risk management system, the remuneration policies of insurance and reinsurance undertakings should contain information on how those policies take into account the integration of sustainability risks in the risk management system.

(6)

The prudent person principle laid down in Article 132 of Directive 2009/138/EC requires that insurance and reinsurance undertakings only invest in assets the risks of which they can identify, measure, monitor, manage, control and report properly. In order to ensure that climate and environmental risks are effectively managed by insurance and reinsurance undertakings, the implementation of the prudent person principle should take into account sustainability risks and insurance and reinsurance undertakings should reflect in their investment process the sustainability preferences of their customers as taken into account in the product approval process.

(7)

Delegated Regulation (EU) 2015/35 should therefore be amended accordingly.

(8)

Supervisory authorities and insurance and reinsurance undertakings should be given sufficient time to adapt to the new requirements contained in this Regulation. Its application should therefore be deferred,

(1)

The transition to a low-carbon, more sustainable, resource-efficient and circular economy in line with the Sustainable Development Goals is key to ensuring the long-term competitiveness of the economy of the Union. In 2016, the Union concluded the Paris Agreement (2). Article 2(1), point (c), of the Paris Agreement sets out the objective of strengthening the response to climate change by, among others, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

(2)

Recognising that challenge, the Commission presented the European Green Deal (3) in December 2019. The Green Deal represents a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net greenhouse gas emissions from 2050 onwards and where economic growth is decoupled from resource use. That objective requires that clear signals are given to investors with regard to their investments to avoid stranded assets and to raise sustainable finance.

(3)

In March 2018, the Commission published its Action Plan ‘Financing Sustainable Growth’ (4), setting up an ambitious and comprehensive strategy on sustainable finance. One of the objectives set out in the Action Plan is to reorient capital flows towards sustainable investments to achieve sustainable and inclusive growth.

(4)

Proper implementation of the Action Plan encourages investors’ demand for sustainable investments. It is therefore necessary to clarify that sustainability factors and sustainability-related objectives should be considered within the product governance requirements set out in Commission Delegated Regulation (EU) 2017/2358 (5).

(5)

Insurance undertakings and insurance intermediaries manufacturing insurance products should consider sustainability factors in the product approval process of each insurance product and in the other product governance and oversight arrangements for each insurance product that is intended to be distributed to customers seeking insurance products with a sustainability-related profile.

(6)

Considering that the target market should be set at a sufficient granular level, a general statement that an insurance product has a sustainability-related profile should not be sufficient. It should rather be specified by the insurance undertaking or insurance intermediary manufacturing the insurance product to which group of customers with specific sustainability-related objectives the insurance product is supposed to be distributed.

(7)

To ensure that insurance products with sustainability factors remain easily available also for customers that do not have sustainability preferences, insurance undertakings and insurance intermediaries manufacturing insurance products should not be required to identify groups of customers with whose needs, characteristics and objectives an insurance product with sustainability factors is not compatible.

(8)

The sustainability factors of an insurance product should be presented in a transparent manner to enable insurance distributors to provide the relevant information to their customers or potential customers.

(9)

The impact assessment underpinning subsequent legislative initiatives published in May 2018 (6) demonstrated the need to clarify that sustainability factors should be taken into account by insurance intermediaries and insurance undertakings distributing insurance-based investment products as part of their duties toward their customers and potential customers.

(10)

To maintain a high standard of investor protection, insurance intermediaries and insurance undertakings distributing insurance-based investment products should, when identifying the types of conflicts of interest the existence of which may damage the interests of a customer or potential customer, include those types of conflicts of interest that stem from the integration of a customer’s sustainability preferences. For existing customers, for whom a suitability assessment has already been undertaken, insurance intermediaries and insurance undertakings should have the possibility to identify the customer’s individual sustainability preferences at the next regular update of the existing suitability assessment.

(11)

Insurance intermediaries and insurance undertakings that provide advice on insurance-based investment products should be able to recommend suitable insurance-based investment products to their customers or potential customers and should therefore be able to ask questions to identify a customer’s individual sustainability preferences. In accordance with the obligation to carry out distribution activities in accordance with the best interest of costumers, recommendations to customers or potential customers should reflect both the financial objectives and any sustainability preferences expressed by those customers. It is therefore necessary to clarify that the inclusion of sustainability factors in the advisory process must not lead to mis-selling practices or to the misrepresentation of insurance-based investment products as fulfilling sustainability preferences where they do not. In order to avoid such practices or misrepresentations, insurance intermediaries and insurance undertakings providing advice on insurance-based investment products should first assess a customer’s or potential customer’s other investment objectives and individual circumstances, before asking for his or her potential sustainability preferences.

(12)

Insurance-based investment products with various degrees of sustainability-related ambition have been developed so far. To enable customers or potential customers to understand the different degrees of sustainability and take informed investment decisions in terms of sustainability, insurance intermediaries and insurance undertakings distributing insurance-based investment products should explain the distinction between, on the one hand, insurance-based investment products that pursue, fully or in part, sustainable investments in economic activities that qualify as environmentally sustainable under Regulation (EU) 2020/852 of the European Parliament and of the Council (7), sustainable investments as defined in Article 2, point (17), of Regulation (EU) 2019/2088 of the European Parliament and of the Council (8) and insurance-based investment products that consider principal adverse impacts on sustainability factors that might be eligible for recommendation as meeting individual sustainability preferences of customers, and, on the other hand, other insurance-based investment products without those specific features that should not be eligible for recommendation to customers or potential customers that have individual sustainability preferences.

(13)

It is necessary to address concerns about ‘greenwashing’, that is, in particular, the practice of gaining an unfair competitive advantage by recommending an insurance-based investment product as environmentally friendly or sustainable, when in fact that insurance-based investment product does not meet basic environmental or other sustainability-related standards. In order to prevent mis-selling and greenwashing, insurance intermediaries and insurance undertakings distributing insurance-based investment products should not recommend insurance-based investment products as meeting individual sustainability preferences where those products do not meet those preferences. Insurance intermediaries and insurance undertakings distributing insurance-based investment products should explain to their customers or potential customers the reasons for not doing so and keep records of those reasons.

(14)

It is necessary to clarify that insurance-based investment products that are not eligible for individual sustainability preferences can still be recommended by insurance intermediaries and insurance undertakings distributing insurance-based investment products, but not as meeting individual sustainability preferences. In order to allow for further recommendations to customers or potential customers, where insurance-based investment products do not meet a customer’s sustainability preferences, the customer should have the possibility to adapt information on his or her sustainability preferences. In order to prevent mis-selling and greenwashing, insurance intermediaries and insurance undertakings distributing insurance-based investment products should keep records of the customer’s decision along with the customer’s explanation supporting the adaptation.

(15)

The provisions of this Regulation are closely linked with each other and with the provisions of Regulation (EU) 2019/2088 since they establish a comprehensive system of disclosure of sustainability aspects. To allow for a coherent interpretation and application of these provisions and to make sure that market participants and competent authorities as well as investors are provided with a comprehensive understanding and easy access to them, it is desirable to include them in a single legal act.

(16)

Commission Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 (9) should therefore be amended accordingly.

(17)

Competent authorities, insurance intermediaries and insurance undertakings should be given sufficient time to adapt to the new requirements contained in this Regulation. Its application should therefore be deferred,

(1)

Pursuant to Article 50(2)(a) of Regulation (EU) No 1151/2012, Hungary’s application to register the name ‘Őrségi tökmagolaj’ was published in the Official Journal of the European Union (2).

(2)

As no statement of opposition under Article 51 of Regulation (EU) No 1151/2012 has been received by the Commission, the name ‘Őrségi tökmagolaj’ should therefore be entered in the register,

(1)

Pursuant to Article 50(2)(a) of Regulation (EU) No 1151/2012, Hungary’s application to register the name ‘Tuzséri alma’ was published in the Official Journal of the European Union (2).

(2)

As no statement of opposition under Article 51 of Regulation (EU) No 1151/2012 has been received by the Commission, the name ‘Tuzséri alma’ should therefore be entered in the register,

(1)

Pursuant to the first subparagraph of Article 53(1) of Regulation (EU) No 1151/2012, the Commission has examined Italy’s application for the approval of amendments to the specification for the protected geographical indication ‘Pera Mantovana’, registered under Commission Regulation (EC) No 134/98 (2).

(2)

Since the amendments in question are not minor within the meaning of Article 53(2) of Regulation (EU) No 1151/2012, the Commission published the amendment application in the Official Journal of the European Union (3) as required by Article 50(2)(a) of that Regulation.

(3)

As no statement of opposition under Article 51 of Regulation (EU) No 1151/2012 has been received by the Commission, the amendments to the specification should be approved,

(1)

Pursuant to Article 50(2)(a) of Regulation (EU) No 1151/2012, Italy’s application to register the name ‘Olio di Roma’ was published in the Official Journal of the European Union (2).

(2)

As no statement of opposition under Article 51 of Regulation (EU) No 1151/2012 has been received by the Commission, the name ‘Olio di Roma’ should therefore be entered in the register,

(1)

The Commission has examined the application for the approval of amendments to the specification for the Protected Designation of Origin ‘Iaşi’, forwarded by Romania in accordance with Article 105 of Regulation (EU) No 1308/2013.

(2)

The Commission has published the application for the approval of the amendments to the specification in the Official Journal of the European Union, as required by Article 97(3) of Regulation (EU) No 1308/2013 (2).

(3)

No statement of objection has been received by the Commission under Article 98 of Regulation (EU) No 1308/2013.

(4)

The amendments to the specification should therefore be approved in accordance with Article 99 of Regulation (EU) No 1308/2013.

(5)

The measures provided for in this Regulation are in accordance with the opinion of the Committee for the Common Organisation of the Agricultural Markets,

(1)

In accordance with Article 97(2) and (3) of Regulation (EU) No 1308/2013, the Commission has examined the application to register the name ‘Muškat momjanski/Moscato di Momiano’ forwarded by Croatia and has published it in the Official Journal of the European Union (2).

(2)

No statement of objection has been received by the Commission under Article 98 of Regulation (EU) No 1308/2013.

(3)

In accordance with Article 99 of Regulation (EU) No 1308/2013, the name ‘Muškat momjanski/Moscato di Momiano’ should be protected and entered in the register referred to in Article 104 of that Regulation.

(4)

The measures provided for in this Regulation are in accordance with the opinion of the Committee for the Common Organisation of the Agricultural Markets,

(1)

The Commission examined France’s application for the approval of amendments to the specification for the Protected Geographical Indication ‘Coteaux du Libron’, submitted pursuant to Article 105 of Regulation (EU) No 1308/2013. These amendments include changing the name ‘Coteaux du Libron’ to ‘Coteaux de Béziers’.

(2)

The Commission published the application for the approval of amendments to the specification in the Official Journal of the European Union (2), as required by Article 97(3) of Regulation (EU) No 1308/2013.

(3)

No statement of objection has been received by the Commission under Article 98 of Regulation (EU) No 1308/2013.

(4)

The amendments to the specification should therefore be approved in accordance with Article 99 of Regulation (EU) No 1308/2013 in conjunction with Article 15(2) of Delegated Regulation (EU) 2019/33.

(5)

The measures provided for in this Regulation are in accordance with the opinion of the Committee for the Common Organisation of Agricultural Markets,

(1)

In accordance with Article 17(5) of Regulation (EC) No 110/2008 of the European Parliament and of the Council (2), the Commission has examined Germany’s application of 7 June 2019 for the registration of the geographical indication ‘Bayerischer Bärwurz’.

(2)

Regulation (EU) 2019/787, which replaces Regulation (EC) No 110/2008, entered into force on 25 May 2019. Under Article 49(1) thereof, Chapter III of Regulation (EC) No 110/2008 on geographical indications is repealed with effect from 8 June 2019.

(3)

After concluding that the application complied with Regulation (EC) No 110/2008, the Commission published the main specifications of the technical file in the Official Journal of the European Union (3) as required by Article 17(6) of that Regulation, in accordance with the first subparagraph of Article 50(4) of Regulation (EU) 2019/787.

(4)

No notice of opposition has been received by the Commission under Article 27(1) of Regulation (EU) 2019/787.

(5)

The name ‘Bayerischer Bärwurz’ should therefore be registered as a geographical indication,

(1)

By Regulation (EC) No 599/2009 (2), the Council imposed a definitive anti-dumping duty ranging from EUR 0 to EUR 198 per tonne on imports of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, commonly known as ‘biodiesel’, in pure form or in a blend containing by weight more than 20 % of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, at that time falling under CN codes ex 1516 20 98 (TARIC code 1516209820), ex 1518 00 91 (TARIC code 1518009120), ex 1518 00 99 (TARIC code 1518009920), ex 2710 19 41 (TARIC code 2710194120), 3824 90 91, ex 3824 90 97 (TARIC code 3824 90 97 87), and originating in the United States of America (‘USA’ or ‘the country concerned’). The anti-dumping duty imposed by that regulation is hereafter referred to as the ‘original measures’. The investigation that led to the imposition of the original measures will hereinafter be referred to as ‘the original investigation’.

(2)

By Council Implementing Regulation (EU) No 444/2011 (3), following an anti-circumvention investigation, the Council extended the definitive anti-dumping duty imposed by Regulation (EC) No 599/2009 to imports of biodiesel consigned from Canada, whether declared as originating in Canada or not, with the exception of those produced by the companies BIOX Corporation, Oakville and Rothsay Biodiesel, Guelph, both located in Ontario, Canada. By the same Regulation the Council also extended the definitive anti-dumping duty imposed by Council Regulation (EC) No 599/2009 to imports of biodiesel in a blend containing by weight 20 % or less of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, originating in the USA.

(3)

By Implementing Regulation (EU) 2015/1518 (4), the European Commission re-imposed the definitive anti-dumping measures on imports of biodiesel originating in the USA following an expiry review (the ‘previous expiry review’).

(4)

Moreover, Regulation (EU) 2015/1518 as amended by Regulation (EU) 2016/676 (5), also extended the definitive anti-dumping duty to imports of biodiesel consigned from Canada, whether declared as originating in Canada or not, with the exception of those produced by the companies BIOX Corporation, Oakville and Rothsay Biodiesel, Guelph, both located in Ontario, Canada as well as DSM Nutritional Products Canada Inc., Dartmouth, Nova Scotia, Canada. By the same Regulation, the European Commission also extended the definitive anti-dumping duty to imports of biodiesel in a blend containing by weight 20 % or less of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, originating in the USA.

(5)

The anti-dumping duties currently in force are fixed amounts ranging between EUR 0 per tonne and EUR 198 per tonne on imports from the sampled exporting producers, EUR 115,6 per tonne on imports from the non-sampled cooperating companies and a fixed amount of EUR 172,2 per tonne on imports from all other companies.

(6)

In addition, by Commission Implementing Regulation (EU) 2017/1598 (6), Regulation (EU) 2015/1518 was amended by allowing companies that did not export biodiesel during the original investigation period to request a review whether they can be made subject to the duty rate imposed on the cooperating companies not in the sample.

(7)

By Commission Implementing Regulation (EU) 2018/1121 (7), following a request for new exporting producer treatment, Regulation (EU) 2015/1518 was amended by adding the US company Organic Technologies, Coshocton (Ohio) to Annex I and thus subject to the weighted average duty of EUR 115,6 per tonne applicable to cooperating companies not included in the sample.

(8)

Following the publication of a notice of impending expiry (8) the European Commission (‘the Commission’) received a request for a review pursuant to Article 11(2) of the basic Regulation.

(9)

The request for review was lodged on 11 June 2020 by the European Biodiesel Board (‘EBB’ or ‘the applicant’), on behalf of Union producers representing more than 25 % of the total Union production of biodiesel. The request for review was based on the grounds that the expiry of the measures would likely result in recurrence of dumping and recurrence of injury to the Union industry.

(10)

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 the Commission initiated, on 14 September 2020, an expiry review with regard to imports of biodiesel originating in the USA, 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 (9) (‘the Notice of Initiation’).

(11)

On the same date, the Commission initiated a separate expiry review of the anti-subsidy measures in force concerning imports of biodiesel originating in the USA (10).

(12)

The Government of Canada commented on this initiation, noting that, if the measures were to be maintained, the exemption granted to three Canadian producers of biodiesel should be retained. The exemption was maintained in Article 2 of the present Regulation.

(13)

The investigation of a continuation or recurrence of dumping covers the period from 1 July 2019 to 30 June 2020 (‘the review investigation period’ or ‘RIP’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covers the period from 1 January 2017 to the end of the review investigation period (‘the period considered’).

(14)

This case was initiated on 14 September 2020, that is during the transition period agreed between the United Kingdom (‘UK’) and the EU in which the UK remained subject to the Union law. This period ended on 31 December 2020. Consequently, as of 1 January 2021, companies and associations from the UK no longer qualified as interested parties in this proceeding.

(15)

By a note to the case file (11) on 15 January 2021, the Commission invited UK operators that considered that they nevertheless would still qualify as interested parties to contact it. BP OIL International Limited and Argent Energy requested to continue to be considered as interested parties and were granted this right based on the evidence submitted. In particular, both companies provided proof of the existence of related entities within the respective group active on the Union market. On the other hand, the UK parent company Valero Energy Limited was replaced by its Irish subsidiary Valero Energy Limited Ireland since the latter one is active on the Union market.

(16)

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 producers in the USA and the US 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.

(17)

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. No requests for a hearing were received.

(18)

In the Notice of Initiation, the Commission stated that it might use sampling in accordance with Article 17 of the basic Regulation.

(19)

On 14 September 2020, the Commission notified to interested parties the provisional sample of Union producers pursuant to Section 5.4 of the Notice of Initiation. It selected the sample on the basis of the size of the production and sales volume of the like product in 2019 as well as the geographic location of the producers of the like product. This sample consisted of three Union producers. The sampled Union producers accounted for 17,5 % of the estimated total production volumes of the like product in the Union and it also ensured a good geographical spread. The Commission invited interested parties to comment on the provisional sample. No comments were received within the deadline of 7 days of the notification of the provisional sample of Union producers.

(20)

In order 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.

(21)

Only one unrelated importer, Shell Trading Rotterdam BV, provided the requested information and, consequently, the Commission decided that sampling was not necessary.

(22)

In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in the USA to provide the information specified in the Notice of Initiation. In addition, the Commission asked the authorities of the country concerned to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(23)

At the initiation a copy of questionnaires was made available in the file for inspection by interested parties and on DG Trade’s website.

(24)

Three exporting producers in the USA came forward and expressed their willingness to cooperate with the Commission in the investigation. In view of the low number, the Commission decided that sampling was not necessary. Accordingly, all three companies that came forward were requested to complete a questionnaire and submit it to the Commission within the given deadline.

(25)

On 15 October 2020, one of these three companies informed the Commission by an email that it would not cooperate further. Moreover, neither of the two other companies provided the requested information within the required deadline by completing and returning the questionnaire replies.

(26)

On 10 November 2020 the Commission sent a letter informing all three companies about the intention to apply Article 18 of the basic Regulation and base the findings of the investigation on facts available. The US authorities were also informed about this intention. The deadline for providing comments to the letter was 17 November 2020. No comments were received.

(27)

Since none of the three exporting producers in the USA cooperated in the expiry review investigation it was decided to apply the provisions of Article 18 of the basic Regulation and to base findings on the facts available.

(28)

At initiation, a copy of the questionnaires was made available in the file for inspection by interested parties and on DG Trade’s website.

(29)

Questionnaire replies were received from the three sampled Union producers as well as from an unrelated Union importer.

(30)

Due to the outbreak of COVID-19 and the confinement measures put in place by various Member States as well as by various third countries, the Commission could not carry out verification visits pursuant to Article 16 of the basic Regulation. The Commission instead cross-checked remotely all the information deemed necessary for its determination in line with its Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (12). The Commission carried out remote crosschecks (‘RCC’) of the following companies/parties:

(31)

On 21 May 2021, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure.

(32)

The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing.

(33)

The product concerned is the same as in in the original investigation and the previous expiry review, namely fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, commonly known as ‘biodiesel’, in pure form or in a blend containing by weight more than 20 % of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, originating in the USA, currently falling under CN codes ex 1516 20 98 (TARIC code 1516209829), ex 1518 00 91 (TARIC code 1518009129), ex 1518 00 99 (TARIC code 1518009929), ex 2710 19 43 (TARIC code 2710194329), ex 2710 19 46 (TARIC code 2710194629), ex 2710 19 47 (TARIC code 2710194729), ex 2710 20 11 (TARIC code 2710201129), ex 2710 20 16 (TARIC code 2710201629), ex 3824 99 92 (TARIC code 3824999212), ex 3826 00 10 (TARIC codes 3826001029, 3826001059, 3826001099), ex 3826 00 90 (TARIC code 3826009019) (‘the product concerned’).

(34)

Biodiesel is a renewable fuel produced from a wide range of raw materials, i.e. vegetable oils such as rapeseed oil, soybean oil, palm oil, used frying oils (UFO), animal fats or biomass.

(35)

Biodiesel is used in the transport sector, mainly blended with mineral diesel (i.e. petroleum/conventional diesel) and very marginally in its pure form (B100).

(36)

As established in the original investigation as well as in the previous expiry review, this expiry review investigation confirmed that the following products have the same basic physical, chemical and [technical] characteristics as well as the same basic uses:

(37)

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

(38)

The Swedish company Preem AB and Valero Energy Ltd Ireland, fuel producers and suppliers and as such users of the product concerned, argued that Fatty Acid Methyl Ester (FAME) biodiesel and Hydrotreated Vegetable Oil (HVO) biodiesel are two different types of biodiesel, and that HVO should be excluded from the current product scope. In the 2009 Regulation imposing provisional measures (13), all types of biodiesel and biodiesel blends were considered to be biodiesel fuels. FAME and HVO can both be blended with diesel and despite some differences in physical characteristics, the product end-use is the same and both products are produced by the Union industry. In addition, the complaint in the original investigation explicitly defined diesel fuel produced from HVOs as part of the product concerned and no party challenged this statement at that time. Therefore, the claim was rejected.

(39)

In accordance with Article 11(2) of the basic Regulation, the Commission examined whether the expiry of the existing measures would be likely to lead to a continuation or recurrence of dumping.

(40)

Due to the lack of cooperation as explained in recitals 25 to 27 above, it was not possible to carry out an analysis based on verified data supplied by US producers.

(41)

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. The Commission therefore made use of the following sources of information: the request for an expiry review and subsequent submissions from the applicant, Eurostat, the Global Trade Atlas (‘GTA’) and the websites of the US Energy Information Administration (‘EIA’) and the US Department of Agriculture (‘USDA’).

(42)

Following the imposition of measures in 2009, imports of biodiesel from the USA to the Union dropped to almost zero from the year 2013 onwards. For instance, about 156 tonnes were imported from the USA during the RIP (from 1 July 2019 to 30 June 2020). These volumes only represent 0,04 % of total US exports and even less of the Union consumption. Accordingly, the Commission concluded that these low volumes do not provide a sufficient basis for a continuation of a dumping analysis. The Commission therefore focused its investigation on the likelihood of recurrence of dumping should the measures be allowed to lapse.

(43)

The Commission analysed whether it was likely that dumping would recur should the measure lapse. In particular, the following elements were analysed; the relationship between prices of the product produced and sold in the Union and in the USA, the relationship between export prices to third countries and prices in the USA, the relationship between export prices to third countries and the price level in the Union, the unused capacities in the USA and circumvention and absorption practices.

(44)

The Commission services made use of two sources of information for establishing the domestic sales price of biodiesel in the US during the RIP: (i) information provided by the US Department of Agriculture (USDA), and (ii) information in the request for the expiry review.

(45)

For the RIP, the information provided by the USDA showed a domestic sales price ex-works of USD 909,05 per tonne. At the euro/dollar average exchange rate during the RIP (1 EUR = 1,105 USD), this amount corresponds to a US domestic sales price of EUR 822,31 per tonne. This is close to the information provided in the request for the expiry review, which mentioned a domestic sales price of USD 918,06 (EUR 820) per tonne. The Commission considered it appropriate to consider the US domestic price as established (EUR 822,31) for its recurrence analysis.

(46)

The average ex-works price of biodiesel sold in the Union by Union producers during the RIP, as shown in table 1 below, was EUR 771 per tonne.

(47)

In order to re-enter the Union market, the US producers would need to sell at a price close to or lower than EUR 771 per tonne. Their final price should also cover the ocean freight and insurance costs and the existing customs duty (6,5 %) applicable to biodiesel. According to data obtained during the investigation, this would amount to approximately EUR 92 per tonne. The Commission based this amount on the amount of (a) transport and freight, as calculated by the applicant and (b) customs duties (6,5 %) applicable to import price of biodiesel from USA as calculated by the Commission after consulting publicly available information such as Global Trade Atlas (‘GTA’), and rounded it up to EUR 106 to cover also some additional post-importation expenses.

(48)

As a consequence, should the US producers resume exports to the Union at competitive prices, they would most likely need to do so at an ex-works price less than EUR 665 per tonne which would be lower than their domestic sales price in the US and thus at dumped price levels.

(49)

The Commission further analysed the price pattern of US biodiesel exports to third countries during the RIP.

(50)

It consulted publicly available information such as the Global Trade Atlas (‘GTA’) and extracted the quantities and values of the export of biodiesel under the HS code 3826 00 for the RIP. The export quantities (in tonnes) to all countries (EU included) amount to 389 075 tonnes, of which 14 tonnes were exported to the Union.

(51)

The table below compares the average sales price in US dollars per tonne duly adjusted to ex-works (by deducting 82,52 USD per tonne for the inland freight as indicated in the request for the expiry review) with the average domestic price in the USA for the six countries (outside the EU) to which the USA exported more than 0,1 % of their total exports during the RIP.

Table 1

US export volumes and prices during the RIP

(52)

The table shows that for all six exporting countries the US producers are selling at prices below their domestic sale prices in the range from 5 % to 65 %. Moreover, there is a lot of variation in the export prices among the various countries to which the USA exported the most during the RIP.

(53)

Finally, the table shows that the highest average export prices are those to countries such as Canada and Norway to which the US is selling 92 % of their total exports. The request provides in this respect that the more expensive ‘…biodiesel exported to Canada shall be made from specific types of raw materials that have a better resistance to cold temperatures, such as canola, or can also be HVO which has excellent cold properties…’. As a result, this more expensive average export prices to these two countries is explained by the higher cost price of the feedstock (such as for canola).

(54)

The EU market is an attractive market of US exports of biodiesel. Based on the database of the GTA referred to in recital 49 above, a simple average export price to all destinations during the RIP was subsequently calculated (see recital 55 below), taking into consideration the following elements:

(55)

Taking into account all the above elements, the Commission calculated an average export price amounting to USD 682 per tonne (EUR 617). This average export price of EUR 617 is a FOB price to which the ocean freight and insurance costs need to be added to come to a CIF price. These costs were estimated at about USD 52 per tonne (EUR 47) in the request for an expiry review.

(56)

The Commission considers that the EUR 47 per tonne is a reasonable indication for the additional ocean freight and insurance costs to other destinations. The average US export price to third countries was thus established at EUR 617 (FOB), which is, even if ocean freight were to be added, insurance costs, the existing customs duty (6,5 %) (in total rounded up to 104 euros per tonne to cover also some additional post-importation expenses) from US to the EU (in total around EUR 721) would be far below the Union industry ex-works price of EUR 771 per tonne.

(57)

As a result, this shows that the exporting producers from the USA would be able to sell at a price below EUR 771 per tonne to penetrate the Union market, and that this would be for them an incentive to redirect some of the current exports to third countries towards the Union market, as it is more attractively priced than some other third countries’ markets.

(58)

Due to the lack of US producers’ cooperation, the Commission established the US production capacity on the basis of the available information on the website of the US Energy Information Administration (EIA).

(59)

US biodiesel producers must report to this authority (respectively on a yearly and a monthly basis) their existing and planned production capacity, as well as their production, input, stocks and sales of biodiesel.

On the basis of data collected from the EIA, the US biodiesel producers’ capacity during the RIP was 8 412 000 tonnes.

(60)

The US actual production of biodiesel during the RIP was 5 718 000 tonnes (EIA’s data), which corresponds to a capacity utilisation of 68 % and a spare capacity of 32 %, or around 2 694 000 tonnes. This significant spare capacity of the US producers presents an incentive to increase production and sell biodiesel at dumped prices to the Union market, and is therefore is likely to be used to supply the Union market should measures be allowed to lapse. Indeed, the US producers can easily increase their production and export it to the EU with the economic benefit of the increase in capacity utilisation ratio and reduction of unit cost of production. The release in the Union market of the US spare capacity would have a significant impact as it amounts to nearly 18 % of the Union consumption during the RIP.

(61)

Moreover, during the RIP, the US production of biodiesel (5 718 000 tonnes) was lower than the consumption (5 934 000 tonnes). Consequently, the USA was importing more biodiesel than it was exporting. During the RIP the total imports amounted to 629 000 tonnes, and the total exports to 428 000 tonnes. However, if the available production capacity was not used to satisfy the domestic demand during the period considered it is unlikely that such available production capacity would be used in the future for the same purpose. The US production capacity reported in the RIP (8 412 000 tonnes, see previous recital) was significantly higher than the domestic consumption. This means that if export market opportunities open up, the US producers are likely to use their spare capacity for export sales rather than for domestic consumption.

(62)

It is unlikely that the spare capacity would be used to increase exports to third countries other than the EU. The large third country markets (Brazil, Indonesia, Argentina, China, Thailand) are self-sufficient in terms of domestic biodiesel production and the US has thus far not exported much to those countries in spite of its spare capacity. There is no reason to believe that this will change in the future.

(63)

It is therefore likely that US producers would use a substantial part of the spare capacity for additional sales to the EU, which is a very attractive market as it is the biggest in the world with numerous incentives for biodiesel consumption.

(64)

As mentioned in recital 1, the anti-dumping measures imposed in 2009 were found to be circumvented by means of transhipments via Canada and by a change in the composition of the blend. The existence of such practices shows the interest of some US producers to enter the Union market, even after the imposition of measures, and is therefore considered as an indication of the attractiveness of the Union market for US biodiesel producers

(65)

The Union market is very attractive as it is the biggest in the world and there are significant Union and national incentives for biodiesel consumption. Thus, it would be convenient for US producers to utilise their spare capacity to the full extent and also to divert some of their export sales from other less profitable third countries into the Union market.

(66)

On the basis of the table in recital 51, the Commission concluded that US producers are overall selling to third countries at prices below their domestic prices.

(67)

In this respect, in light of the significant spare capacity of the US industry, combined with the attractiveness of the Union market in terms of size and sales price, in particular with regard to the price level of US exports to third countries, and the records of past circumvention practices, the Commission concluded that dumped imports from the USA are likely to recur if the measures in force were allowed to lapse.

(68)

According to the data provided by the applicant, the like product was manufactured by 49 producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

(69)

The total Union production during the review investigation period was established at around 14 millions tonnes. The Commission established the figure on the basis of information provided by the Union industry. As indicated in recital 19, three Union producers were selected in the sample representing 17,5 % of the total Union production of the like product.

(70)

The Commission established the Union consumption on the basis of industry information and Comext for import data.

(71)

Union consumption developed as follows:

Table 2

Union consumption (tonnes)  (14)

(72)

During the review investigation period, consumption of biodiesel in the Union, calculated as the sum of imports of biodiesel and the total sales of the Union industry on the EU market, increased by 22 %, that is from 13,8 million tonnes in 2017 to 16,9 million tonnes.

(73)

The Commission established the volume of imports on the basis of the information provided by Eurostat (Comext database). The market share of the imports was established on the basis of data provided by the applicant for the Union industry domestic sales and Comext for trade data.

(74)

Imports from the country concerned developed as follows:

Table 3

Import volume (tonnes), market share and prices  (15)

(75)

Since the imposition of measures in 2009, imports from the US have virtually ceased and amounted to only 156 tonnes during the RIP (as compared to more than 1 137 000 tonnes during the original investigation period).

(76)

There were virtually no imports of biodiesel from the US to the Union during the review investigation period that could be used as a reliable basis for calculating undercutting.

(77)

As an alternative, the Commission determined the price undercutting during the review investigation period by comparing:

(78)

The result of the comparison was a price undercutting of 6,4 %.

(79)

During the RIP, imports from third countries amounted to 3 750 000 tonnes or approximately 22 % of the overall Union consumption. The main sources of imports of biodiesel other than the US were Argentina (24 % of EU imports), Malaysia (18 %), Singapore (13 %) and Indonesia (5 %).

(80)

The (aggregated) volume of imports as well as the market share and price trends for imports of biodiesel from other third countries developed as follows:

Table 4

Imports from third countries  (16)

(81)

Anti-dumping duties on imports from Argentina and Indonesia – two major biodiesel exporting countries – were removed in 2018. Consequently, imports from third countries increased in 2018 and stayed at a level of around 3,8 million tonnes in 2019 and during the RIP. Overall, imports from third countries except the US increased by 145 % during the period considered. In addition, their market share increased from 11 % to 22 % during the period considered.

(82)

As far as prices are concerned, the situation is different from one country to another.

(83)

Regarding Argentina, the main source of imports, in February 2019, the Commission imposed definitive anti-subsidy measures on imports of biodiesel from this country, and, in parallel, adopted a decision accepting minimum price undertakings from eight Argentine producers and the Argentinian Chamber of Biofuels (CARBIO). This led to a significant increase in prices for year 2019 (by 14 % in comparison with 2018) and the RIP (by 17 % in comparison with 2018).

(84)

Regarding Indonesia, the European Commission imposed in 2019 countervailing duties on imports of subsidised biodiesel from Indonesia. This led to a significant decrease in imports originating from Indonesia for the year 2020.

(85)

For Indonesia and Malaysia, prices were decreasing. At the same time, for the other third countries, they were significantly increasing. Overall, the average sales prices of imports from third countries other than the USA increased during the period considered by 11 % during the period considered. This trend is consistent with the trend observed for imports from the countries concerned in Table 3 above. However, the price trend is different in comparison with the sales prices of the Union industry on the Union market in Table 8 below. The prices of the sampled Union producers were decreasing, in line with the decrease in production costs. The consequence is that the price gap between third countries exporters and the sampled Union producers reduced, increasing the competitiveness of the Union industry.

(86)

The assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(87)

As mentioned in recitals 18 and 19, sampling was used for the assessment of the economic situation of the Union industry.

(88)

For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. It evaluated the macroeconomic indicators on the basis of data provided by the EU industry and other sector-specific macroeconomic data such as the FAO-OECD. It evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

(89)

The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

(90)

The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

(91)

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

Table 5

Production, production capacity and capacity utilisation

(92)

Union production increased from 12,6 million tonnes in 2017 to 14,0 million tonnes during the RIP, that is an increase by 11 % during the period considered. In a situation of consumption increase by 22 % over the period considered, the Union industry responded positively by increasing its production.

(93)

At the same time the production capacity increased by 9 % during the period considered and reached 17,5 million tonnes during the RIP. The Union industry is developing its capacity to respond to an increasing demand. According to a report (18), this capacity expansion concerns mainly Hydrotreated Vegetable Oil (HVO) production.

(94)

As a result of the simultaneous increase of the production and the production capacity, the capacity utilisation was stable during the period considered, at around 80 %.

(95)

The Union industry’s sales volume and market share developed over the period considered as follows:

Table 6

Sales volume and market share

(96)

The Union industry increased their sales on the Union market from 12,3 million tonnes in 2017 to 13,2 million tonnes during the RIP (+ 7 %).

(97)

Since the consumption in the Union increased by 22 %, because of the lower increase in the actual sales volume, the market share of the Union industry decreased, from around 89 % in 2017 to 78 % during the RIP. This decrease of market share is linked to the increase of imports from third countries especially from 2018 onwards (recital 80).

(98)

A number of indicators (production, production capacity, sales, employment) demonstrate a positive growth of the Union industry during the period. Yet, this growth is moderate as compared to the development of the consumption of biodiesel during the same period. In fact, the market share of the Union industry actually decreased during the reference period.

(99)

Employment and productivity developed over the period considered as follows:

Table 7

Employment and productivity

(100)

During the period considered, employment grew from 2 643 to 3 909, an increase of 48 %.

(101)

As production grew to a lesser extent (+ 11 %), this materialised in a decrease in productivity (-25 %).

(102)

As explained in recital 42, it was not possible to make a determination of dumping during the review investigation period. The investigation therefore focused on the likelihood of a recurrence of dumping should the anti-dumping measures be repealed.

(103)

In the previous expiry review the Union industry showed signs of recovery from the effects of past dumping. During the period considered of the current expiry review investigation, the recovery process continued as demonstrated by a favourable trend for the Union industry of the main injury indicators.

(104)

The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 8

Sales prices in the Union

(105)

During the period considered the cost of production decreased by 9 % (from 828 EUR/tonne to 755 EUR/tonne). This is partly due to the decrease in the price of vegetable oils which was on the decrease over the period. While not all biofuel is made of vegetable oils, the price of vegetable oils is a good proxy for the price of the main input for the production of biodiesel.

(106)

The average sales price decreased by 8 %, from 834 EUR/tonne in 2017 to 771 EUR/tonne during the RIP. This can be linked to the decrease observed in the price of production.

(107)

The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 9

Average labour costs per employee

(108)

The average labour cost in the sampled companies increased by 14 % over the RIP. The impact of this variation is rather small given that labour cost represent only about 3 % of the total cost of manufacturing.

(109)

Stock levels of the sampled Union producers developed over the period considered as follows:

Table 10

Inventories

(110)

The level of inventory was stable at around 1 % of the production. This is a very low ratio indicating that the industry is able to work on demand and limit the inventory. This is also necessary to avoid biodiesel degradation.

(111)

Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 11

Profitability, cash flow, investments and return on investments

(112)

The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability remained at a low level. Yet it shows a slightly positive trend over the period considered increasing from 1 % to 3 %. This was linked to the decreasing cost of production for the sampled companies (- 9 %). Behind this average, there is however a great disparity among the sampled Union producers with some companies not making any profit at all.

(113)

The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed positively toward the end of the period considered (in 2019 and first half of 2020), but the year 2018 saw a sharp drop in cashflow. The drop in 2018 is impacted mainly by the specific situation of one of the sampled companies, which has a special business model. For the other two sampled companies the trend was relatively stable.

(114)

Investments in the sampled companies does not present a clear trend over the period considered. Investment from one or the other sampled company or the absence thereof can bring the level of investments up and down from one year to the other. Investments represented about 1-2 % of turnover during the period considered, which is limited.

(115)

The return on investments (ROI) is the profit in percentage of the net book value of investments. It developed positively over the period considered and remained high in the RIP. This high ROI is however mainly linked to low net book value of investments, rather than high profit.

(116)

During the period considered, in the context of almost non-existent imports from the USA, the volumes of imports from third countries increased significantly (by 145 %), but their price level increased as well (by 11 %). At the same time the prices of the Union industry decreased (by 8 %), in line with a decrease in the production costs (by 9 %). Consequently, the price gap between third countries exporters and the sampled Union producers narrowed, thereby increasing the competitiveness of the Union industry.

(117)

Overall, the injury indicators depict a positive trend during the period considered, in particular with regard to production (+ 11 %), production capacity (+ 9 %) and sales (+ 7 %) and show that the Union biodiesel industry is slowly recovering from past injury. The analysis of the injury indicators demonstrates that the Union industry is currently not suffering from material injury. However, some indicators, in particular a low profitability (≤ 3 %) indicate that it is nevertheless still in a fragile economic situation.

(118)

On the basis of the above, the Commission concluded that the Union industry did not suffer material injury within the meaning of Article 3(5) of the basic Regulation during the review investigation period.

(119)

The Commission assessed, in accordance with Article 11(2) of the basic Regulation, whether there would be a likelihood of recurrence of injury to be caused by the dumped imports from the US if the measures were allowed to lapse.

(120)

In this regard, the Commission examined the production capacity and spare capacity in the US, the likely price levels of imports from the US in the absence of anti-dumping measures, and their impact on the Union industry including undercutting without anti-dumping measures

(121)

As described in section 3.3.4 above, the quantities that could be exported by US biodiesel producers are significant compared to the size of the Union market. Indeed, the spare capacities represent 18 % of the Union consumption during the RIP. Consequently, the Commission concluded that the spare capacities available are significant.

(122)

As described in section 3.3.2 above, based on the current pricing behaviour on third countries export markets, the US producers exported to their main third markets at prices lower than the domestic prices in the US. In addition, as indicated in recitals 77-78 above, those prices are also on average undercutting the Union industry prices on the Union market by 6,4 %. Therefore, taking into account the price level of exports from the USA to other third markets, exporting to the Union is potentially much more attractive for US exporters. In addition, as indicated in section 3.3.6 above the Union market is very attractive as it is the biggest in the world and there are significant Union and national incentives for biodiesel consumption.

(123)

Therefore, if measures were allowed to lapse, significant volumes of dumped biodiesel from the USA would exert a very strong downward pressure on Union prices and have a significant impact on the Union industry’s economic situation. As a result, it is likely that Union industry production and sales volumes would decrease and the small profits currently achieved by the industry would turn into losses.

(124)

The Commission further assessed the possible impact of the imports by modelling two possible scenarios should the measures be allowed to lapse, namely (1) a surge of imports from the US and (2) a drop of prices in the EU due to increased competition, all other things being equal.

(125)

In the first scenario, the Commission modelled two possible levels of US imports. The first option entailed that imports from the US would come at their historical volumes (during the initial IP (20)), that is 1,1 million tonnes. As a result of the increase in imports from the US and the consequent decrease in sales of the EU industry, the profitability of the EU industry would fall by 0,14 % point, that is from + 2,84 % to + 2,70 %. The second option took into account the very significant increase in the size of the EU market from 6,6 million tonnes during the initial IP to 17 millions tonnes during the RIP (+ 158 %). In that context, the Commission modelled a surge of imports corresponding to the same market share for the US of 17,2 % as during the initial investigation period. The result was that the profitability of the Union industry would fall by 0,41 % point from + 2,84 % to 2,43 %. In both cases, the impact of a surge of US imports, at constant prices, can be described as rather moderate. This is linked to the high share of the variable costs in the biodiesel industry.

(126)

In the second scenario, the effect of a price decrease was found to be potentially highly damaging. In case of a decrease of Union prices to the level of US exports prices to third countries (721 EUR/tonne), the profit would drop from + 2,84 % to -3,88 %. In case of a decrease of Union prices by 10 %, that is from 771 EUR/tonne to 694 EUR/tonne, the profit would be reduced from + 2,84 % to – 7,94 %. In any case, any price decrease higher than -2,9 % would zero the Union industry profit.

(127)

In reality, if measures were allowed to lapse, it is very likely that a combination of the two scenarios above would occur on the market. In particular, significant volumes of biodiesel originating in the USA could be expected to enter the Union market and at lower prices than the Union industry. As a result, the market share of the Union industry would shrink as well as their prices. This would result in significant losses to the Union industry.

(128)

On this basis, and noting the current fragile situation of the Union industry, the Commission concluded that the absence of measures would in all likelihood result in a significant increase of dumped imports from the USA at injurious prices and material injury would be likely to recur.

(129)

In accordance with Article 21 of the basic Regulation, the Commission examined whether maintaining the existing anti-dumping measures would be against the interest of the Union as whole. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users. In line with Article 21(1) third sentence of the basic Regulation special consideration was given to the need to protect the industry from the negative effects of injurious dumping.

(130)

If existing measures were allowed to lapse, the Union industry will most certainly be faced with increased unfair competition from the US biodiesel producers most likely putting an abrupt halt to the on-going recovery of the Union industry.

(131)

The Commission concluded that the continuation of the measures would be in the interest of the Union industry.

(132)

No importer opposed the prolongation of the measures.

(133)

Shell Trading Rotterdam argued that the measures, by limiting the supply of the Union market, will lead to increased prices. It also noted the availability of the biodiesel from other markets.

(134)

The measures do not seem to affect significantly the importers as alternative sources of supplies are available. This is evidenced by the significant market share of imports from third countries.

(135)

The Commission therefore concluded that the continuation of the measures would not pose a significant detriment to the interest of the importers.

(136)

The participation of users in the investigation was limited.

(137)

Two users, Preem, the largest fuel company in Sweden, and Valero Energy Ltd Ireland claimed that the prolongation of the measures will be a direct hindrance for the green development of the transport sector in Europe. Preem and Valero Energy Ltd Ireland requested specifically that HVO should be excluded from the current product scope as they expect a shortage of HVO in the coming years. Valero Energy Ltd Ireland specifically referred to the EU renewable energy targets for transport for 2030, claiming that those targets would not be met given current EU production.

(138)

The Commission observed that Union producers have enough capacity to satisfy the current demand and even spare capacity to satisfy future increase and exports if need be. Furthermore, it was too early to assess with confidence whether shortages are likely to materialise in 2030, given, in particular, recent expansions in EU capacity. This said, the Commission may be in a better position to assess the situation in case it is asked to conduct an expiry review in five years’ time. Consequently, this claim was dismissed.

(139)

There are no indications that the existing measures in force have affected negatively the Union users of biodiesel, and notably there is no evidence that existing measures had an adverse impact on their profitability.

(140)

The Commission therefore concluded that the continuation of the measures would not be detrimental to the interest of the users.

(141)

On the basis of the above, the Commission concluded that there were no compelling reasons of the Union interest against the maintenance of the existing measures on imports of biodiesel originating in the USA.

(142)

On the basis of the conclusions reached by the Commission with regard to the likelihood of continuation or recurrence of dumping and injury, it follows that, in accordance with Article 11(2) of the basic Regulation, the anti-dumping measures applicable to imports of biodiesel originating in the USA, imposed by Commission Implementing Regulation (EU) 2015/1518, as amended by Regulation (EU) 2016/676, should be maintained.

(143)

As outlined in recital (1) above, the anti-dumping duties in force on imports of biodiesel from the USA were extended to cover also imports of the same product consigned from Canada, whether declared as originating in Canada or not, and to imports of biodiesel in a blend containing by weight 20 % or less of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, originating in the USA.

(144)

The anti-dumping duties to be maintained shall continue to be extended to imports of biodiesel consigned from Canada, whether declared as originating in Canada or not as well as to biodiesel in a blend containing by weight 20 % or less of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, originating in the USA.

(145)

The exporting producers from Canada that were exempted from the measures, as extended by Implementing Regulation (EU) 2015/1518, shall also be exempted from the measures imposed by this Regulation.

(146)

The measures provided for in this Regulation are in accordance with the opinion of the Committee established by Article 15(1) of the basic Regulation.

(147)

In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (21), when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month,

(1)

By Regulation (EC) No 598/2009 (2) , the Council imposed a definitive countervailing duty, ranging from EUR 211,2 to EUR 237 per tonne net, on imports of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, commonly known as ‘biodiesel’, in pure form or in a blend containing by weight more than 20 % of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, at that time falling under CN codes ex 1516 20 98 (TARIC code 1516209820), ex 1518 00 91 (TARIC code 1518009120), ex 1518 00 99 (TARIC code 1518009920), ex 2710 19 41 (TARIC code 2710194120), ex 3824 90 91, ex 3824 90 97 (TARIC code 3824909787), and originating in the United States of America (‘USA’ or ‘the country concerned’). The countervailing duty imposed by this regulation is hereafter referred to as ‘the original measures’. The investigation that led to the imposition of the original measures will hereafter be referred to as ‘the original investigation’.

(2)

By Implementing Regulation (EU) No 443/2011 (3), following an anti-circumvention investigation, the Council extended the definitive anti-countervailing imposed by Council Regulation (EC) No 598/2009 to imports of biodiesel consigned from Canada, whether declared as originating in Canada or not, with the exception of those produced by the companies BIOX Corporation, Oakville and Rothsay Biodiesel, Guelph, Ontario, Canada. By the same Regulation, the Council also extended the definitive countervailing duty imposed by Council Regulation (EC) No 598/2009 to imports of biodiesel in a blend containing by weight 20 % or less of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, originating in the USA.

(3)

By Implementing Regulation (EU) 2015/1519 (4), the European Commission re-imposed the definitive countervailing measures on imports of biodiesel originating in the USA following an expiry review (the ‘previous expiry review’).

(4)

Moreover, Regulation (EU) 2015/1519 as amended by Regulation (EU) 2016/675 (5) also extended the definitive countervailing duty to imports of biodiesel consigned from Canada, whether declared as originating in Canada or not, with the exception of those produced by the companies BIOX Corporation, Oakville and Rothsay Biodiesel, Guelph, both located in Ontario, Canada as well as by the company DSM Nutritional Products Canada Inc., Dartmouth, Nova Scotia, Canada. By the same Regulation, the European Commission also extended the definitive countervailing duty to imports of biodiesel in a blend containing by weight 20 % or less of fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, originating in the USA.

(5)

The countervailing duties currently in force are fixed amounts ranging from EUR 211,2 to EUR 237 per tonne net on imports from the exporting producers.

(6)

Following the publication of a notice of impending expiry (6) the European Commission (‘the Commission’) received a request for a review pursuant to Article 18 of Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (‘the basic Regulation’).

(7)

The request for review was lodged on 11 June 2020 by the European Biodiesel Board (‘EBB’ or ‘the applicant’), on behalf of Union producers representing more than 25 % of the total Union production of biodiesel. The request for review was based on the grounds that the expiry of the measures would likely result in continuation or recurrence of subsidised biodiesel entering the Union and of recurrence of injury to the Union industry.

(8)

Having determined, after consulting the Committee established by Article 15(1) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (7) that sufficient evidence existed for the initiation of an expiry review, the Commission initiated, on 14 September 2020, an expiry review with regard to imports of biodiesel originating in the USA on the basis of Article 18(1) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (8) (‘the Notice of Initiation’).

(9)

On the same day, 14 September 2020, the Commission initiated in parallel an expiry review of the anti-dumping measures in force on imports of biodiesel originating in the USA.

(10)

The Government of Canada commented on this initiation, noting that, if the measures were to be maintained, the exemption granted to three Canadian producers of biodiesel should be retained. The Commission maintained the exemption in Article 2 of the present Regulation.

(11)

The investigation of a continuation or recurrence of subsidisation covered the period from 1 July 2019 to 30 June 2020 (‘the review investigation period’ or ‘the RIP’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2017 to the end of the review investigation period (‘the period considered’).

(12)

This case was initiated on 14 September 2020, that is during the transition period agreed between the United Kingdom (‘UK’) and the EU in which the UK remained subject to the Union law. This period ended on 31 December 2020. Consequently, as of 1 January 2021, companies and associations from the UK no longer qualified as interested parties in this proceeding.

(13)

By a note to the case file (9) on 15 January 2021, the Commission invited UK operators that considered that they still qualified as interested parties to contact it. BP OIL International Limited and Argent Energy requested to continue to be considered as interested parties and were granted this right based on the evidence submitted. In particular, both companies provided proof of the existence of related entities within the respective group active on the Union market. On the other hand, the UK parent company Valero Energy Limited was replaced by its Irish subsidiary Valero Energy Limited Ireland since the latter one is active on the Union market.

(14)

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 producers in the USA and the US 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.

(15)

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.

(16)

In the Notice of Initiation, the Commission stated that it might use sampling in accordance with Article 27 of the basic Regulation.

(17)

On 14 September 2020, the Commission notified to interested parties the provisional sample of Union producers pursuant to Section 5.3 of the Notice of Initiation. It selected the sample on the basis of the size of the production and sales volume of the like product in 2019 as well as the geographic location of the producers of the like product. This sample consisted of three Union producers. The sampled Union producers accounted for 17,5 % of the estimated total production volumes of the like product in the Union and it also ensures a good geographical spread. The Commission invited interested parties to comment on the provisional sample. No comments were received within the deadline of 7 days of the notification of the provisional sample of Union producers.

(18)

In order 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.

(19)

Only one unrelated importer, Shell Trading Rotterdam BV, provided the requested information and, consequently, the Commission decided that sampling was not necessary.

(20)

In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked all exporting producers in the USA to provide the information specified in the Notice of Initiation. In addition, it asked the authorities of the exporting country to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(21)

Three exporting producers in the USA came forward and expressed their willingness to cooperate with the Commission in the investigations. In view of the low number, it decided that sampling was not necessary and all three companies were invited to submit a questionnaire reply.

(22)

On 15 October 2020, one of the originally cooperating companies sent an email to the Commission informing that it would not cooperate further. Moreover, the other two other companies did also not provide the requested information within the required deadline by completing and returning the questionnaire replies.

(23)

On 10 November 2020, the Commission sent a letter informing all three companies about its intention to apply Article 28 of the basic Regulation and base the findings of the investigation on facts available. The US authorities were also informed about this intention. The deadline for providing comments to the letter was 17 November 2020. No comments were received.

(24)

Moreover, at the initiation, by Note Verbale dated 14 September 2020, the Commission requested the authorities of the USA to complete and return the anti-subsidy questionnaire intended for the Government of USA. It did not receive a reply within the required deadline.

(25)

On 10 November 2020, the Commission sent a Note Verbale informing the US authorities about its intention to apply Article 28 of the basic Regulation and base the findings of the investigation on facts available given its lack of cooperation.

(26)

The deadline for providing comments to the Note Verbale was 17 November 2020. No comments were received.

(27)

The Commission therefore concluded that neither any exporting producer nor the Government of USA cooperated in the expiry review investigation. As a consequence, it decided to apply the provisions of Article 28 of the basic Regulation and base its findings, affirmative or negative, on the facts available.

(28)

At the initiation, a copy of the questionnaires was made available in the file for inspection by interested parties and on DG Trade’s website.

(29)

Questionnaire replies were received from the three sampled Union producers as well from an unrelated Union importer.

(30)

In view of the outbreak of COVID-19 and the confinement measures put in place by various Member States as well as by various third countries, the Commission could not carry out verification visits pursuant to Article 26 of the basic Regulation. The Commission instead cross-checked remotely all the information deemed necessary for its determination in line with its Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (10). The Commission carried out remote crosschecks (‘RCC’) of the following companies/parties: