Council Implementing Regulation (EU) No 917/2011 of 12 September 2011 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of ceramic tiles originating in the People’s Republic of China

• (154) With regards to the claim that the increase of stocks registered by the Union industry should be attributed to a fall in Union consumption, the Commission recalls the reasoning contained in recital 108 of the provisional Regulation, i.e. that the pressure of Chinese imports was very strong especially in the sector of sales of big batches and that this had a clear impact on the Union producers’ stocks. The growth of the stock ratio over the period considered cannot be explained only by the difficulty in selling the products, but also by the necessity to keep an extremely high variety of products available in the stocks. The conclusion on the injurious effect of Chinese imports on stocks is therefore confirmed.

Impact of the economic crisis

• (155) Several interested parties maintained that the economic crisis was the real cause of the difficulties facing the Union industry. This was evidenced by the fact that the main deteriorations took place between 2008 and 2009, i.e. in the year that the crisis hit, while the trend was less sharp in the following period. It is also pointed out that the period considered included the high and low peaks of a cycle with the high point being characterised by the boom in the construction sector and the low point by the financial crisis and the decrease in exports due to the establishment of new production sites in third world countries.

• (156) After final disclosure, one interested party maintained that the deterioration of a number of injury indicators was due to the economic crisis rather than the dumped imports. According to this party, the effect of the recession was to increase the demand of large bulk of low priced products. As a result, the Union industry had to focus more into the production for large bulk orders, a segment where the Chinese were already operating, with an increase in stock level as a result. Furthermore, the recession allegedly caused inflation in the Union, comparatively higher than in China, causing the increase in costs of production of the Union producers which allegedly led the Union industry to sell at prices below costs of production.

• (157) Another party claimed that the profit of the Union industry had gone up significantly in the last quarter of the IP and that this showed that the Union industry had recovered after the economic crisis. This party requested that profit for the IP should be given per quarter which would likely indicate a significantly higher profitability towards the end of the IP.

• (158) The fact that the economic downturn did have an effect on the performance of the Union industry was already acknowledged in recital 120 of the Regulation imposing provisional measures. In this context it should be recalled that in order for causation to be established, the relevant legal standard stipulates that the dumped imports need to have caused material injury to the Union Industry. Dumped imports however need not have been the sole cause of injury.

• (159) Furthermore the investigation showed that the Chinese trend of increasing exports could continue despite the economic crisis. China was indeed the only actor in the market that was able to maintain its market share in the difficult economic situation.

• (160) As for the structural change in the Union demand mentioned in recital 156, no evidence was brought forward in support of this claim. To the contrary, it is recalled that, as explained in recital 106 of the provisional Regulation, the investigation revealed that the Union industry had to change its product mix by supplying a larger variety of products in terms of types, colour and size and had to increase its stocks in order to react in a short time to very specific orders. This claim has therefore to be rejected.

• (161) Concerning the impact of inflation in the costs of production, it is observed that the inflation rate in the Union has not been on average higher than in China during the period under consideration and that it cannot therefore explain the difficulties of Union producers in selling at sustainable prices. Given the level of undercutting it can furthermore not be concluded that a downward pressure on Chinese import prices has been caused by the Union industry. On this basis, the claim brought forward by this party had to be rejected.

• (162) As concerns the situation of the Union industry on the other hand, it is recalled that the provisional Regulation (recital 126) showed that the aggressive pricing behaviour by the Chinese exporters affected the Union industry profitability over the period under consideration already before the world economic downturn. This shows that even in the absence of the crisis, the pressure of low-priced imports from China was on its own sufficient to be able to cause material injury to the Union industry.

• (163) This fact, if considered together with dumped prices, strengthens the conclusion that the causal link between Chinese exports and the Union industry’s injury is not broken by the economic downturn.

• (164) Concerning the request that profit for the IP be given per quarter, this was not considered to be relevant in the current investigation because even if such a more pronounced improvement of the profit had occurred, it would have to be compared to the target profit of 3,9 %.

Impact of the Union industry’s failure to restructure

• (165) One interested party claimed that injury to the Union producers should be attributed to their failure to restructure as the market contraction of 29 % had been met only with a 7 % capacity cut and a 16 % cut in employment.

• (166) In this sector, the dismissal of production capacity is a difficult process, as the recuperation of the capacity in case of an eventual recovery of the market is extremely costly for the producers. The cut in employment seen in the period concerned was in the same order of magnitude as the decrease of the market. The trend for employment does not have to perfectly mirror the trend of the output, since not all jobs are directly linked to actual production. In conclusion, the fact that the dismissal of capacity and working force in the industry did not exactly match the contraction of the market does not point to a failure to restructure. Contrary to the claims and taking into account the structure of the industry, a 7 % capacity cut and a 16 % cut in employment must therefore be considered significant.

Effect of the Union industry’s performance on export markets

• (167) One interested party claimed that it was the high prices and not the effect of the Chinese exports that had caused the decline in the Union industry export sales.

• (168) In respect of this claim it is recalled that the Union industry export performance has recovered after the economic crisis. The claim that the export performance would have had a significantly detrimental effect on the results of the Union industry can therefore not be accepted.

Conclusion on causation

• (169) None of the arguments submitted by the interested parties demonstrates that the impact of factors other than dumped imports from China is such as to break the causal link between the dumped imports and the injury found. The conclusions on causation in the provisional Regulation are hereby confirmed.

UNION INTEREST

• (170) In view of parties’ comments the Commission conducted further analysis of all arguments pertaining to the Union interest. All issues have been examined and the conclusions of the provisional Regulation confirmed.

Interest of the Union industry

• (171) In the absence of comments regarding the interest of the Union industry, the conclusions in recitals 137 to 141 of the provisional Regulation are hereby confirmed.

Interest of importers

• (172) One party claimed that the imposition of measures threatened the economic existence of importers as they would be able to only partially pass over the extra costs of the duties to their customers.

• (173) Following final disclosure two parties opposed the conclusion that importers can easily switch from Chinese supplies to other sources of supply, in particular because qualities and prices were not comparable.

• (174) Regarding this claim, it is recalled that a large part of imports is not affected by duties as it is of non-Chinese origin. The characteristics of the product, being produced all over the world in comparable qualities, suggest that these products are interchangeable and that therefore a number of alternative sources are available, despite the allegations made. Even for importers that rely on Chinese imports, which the investigation found to be dumped and sold at prices which significantly undercut those of the products originating in the Union, the investigation found that importers can apply to their selling prices mark-ups in excess of 30 %. This, together with the fact that importers have been found to have realised profits of around 5 % and their possibility to pass on at least part of potential cost increases to their customers, suggests that they are in a position to cope with the impact of measures.

• (175) Furthermore, and as concluded in recital 144 of the provisional Regulation, the imposition of measures would not hamper Union importers from increasing their import shares of products from the other non-dumped sources available to them both in the Union and in other third countries.

• (176) One importer alleged that for a certain product type, Chinese prices would currently be higher that those of the Union industry and that measures would therefore not allow to export this specific type in the future.

• (177) This claim was not supported by any evidence. Furthermore, according to the information available, this product type only represented a minor proportion of the market and would not affect significantly the supply situation in the Union market. The claim was therefore rejected.

Interest of users

• (178) Some interested parties claimed that the impact on users would be significant. In particular it was held that even the minimum price increase of 32,3 % will prevent customers’ quality purchases. It was also held that while it may be true that the impact on large diversified Do-It-Yourself shops might be limited, small specialist shops would be significantly affected.

• (179) As for the impact on final users, the Commission confirms what was provisionally concluded in the Commission Regulation imposing provisional duties, under recitals 152 and 153, i.e. that the price effect will be limited.

• (180) The construction sector, one of the larger customers of ceramic tiles’ producers, decided not to cooperate in the investigation. After the imposition of provisional measures, the European Construction Industry Federation – FIEC – was again invited to provide statistics showing to what extent, if any, it would be affected by the imposition of measures. FIEC confirmed that, although there is no information directly available, the cost impact of the measures on their overall business is very low. They also explained that the low interest by their members should be seen as supporting the Commission proposal.

• (181) Finally, regarding small specialist shops, the Commission could not obtain any conclusive data that would confirm the magnitude and the extent of impact of anti-dumping measure. Parallel to what happens to importers, it should be remembered that ceramic tiles are produced in the Union and in many non-dumping third countries; therefore a serious risk of shortage of supply for retail shops can be excluded.

Interest of final consumers

• (182) Efforts were directed towards obtaining a more detailed impact assessment from consumers. The investigation showed that the impact is likely to be limited.

• (183) First of all, the absolute value of the measures is calculated on the import price, therefore on a basis which is much lower than the final retail price of the product concerned. This value can be diluted in the various steps (importers, wholesalers and retailers) before reaching the final customer. And even if the importers and resellers would transfer the whole burden of the duty to the customers, it is recalled that there is a large offer of products in the market not subject to measures, produced both by Union producers and third countries producers.

• (184) The Commission calculated the impact of the anti-dumping duties on prices to consumers by assessing the amount of duties to be paid, according to the actual imports from China, and allocating this amount directly to the consumers, assuming that importers, wholesalers and retailers would pass all the additional cost on to final consumers. The cost impact so calculated is significantly lower than EUR 0,5 per m². It is recalled that the provisional Regulation concluded that the average yearly average consumer consumption is around 2,2 m² per person in the Union. Given the low impact of the duty per square metre, the cost increase will therefore probably be limited even if the consumer was to buy a considerable quantity of the product concerned for construction or renovation works.

Conclusion on Union interest

• (185) The effects of the imposition of measures can be expected to assist the Union industry, with consequent beneficial effects on the competitive conditions on the Union market and the reduction of the threat of closures and reductions in employment.

• (186) Furthermore, the imposition of the measures can be expected to have a limited impact on the users/importers, which would be able to source from a wide range of suppliers in the Union market and in other third countries.

• (187) In the light of the foregoing, it cannot be concluded that the imposition of measures would go against the Union interest.

DEFINITIVE MEASURES Injury elimination level Disclosure

• (188) Two interested parties held that the Commission should have disclosed the underselling margin in the provisional Regulation and one of them claimed that failure to disclose this data meant that interested parties were not able to assess whether the lesser duty rule had been correctly applied.

• (189) In response to the above, the provisional margins were as follows:

Injury margin

• (190) One party claimed that the Commission used an inconsistent approach for the determination of injury and should have based its conclusions on weighted average data of the whole industry.

• (191) In respect to this claim, it is noted that the findings on the injury elimination level are based on verified company specific data which was considered the most reliable basis in order to take into account all pertinent facts for comparison purposes. This claim had therefore to be rejected.

• (192) In view of the conclusions reached with regard to dumping, resulting injury, causation and Union interest, measures should be imposed in order to prevent further injury being caused to the Union industry by the dumped imports from China.

• (193) For the purpose of determining the level of these duties, account was taken of the dumping margins found and the amount of duty necessary to eliminate the injury sustained by the Union industry.

• (194) It was therefore found appropriate to calculate the underselling margin on the basis of the prices identified from the data submitted by Union producers and Chinese exporters.

• (195) When calculating the amount of the anti-dumping duty necessary to remove the effects of the injurious dumping, it was considered that the duty should be so calculated to allow the Union industry to cover its costs of production and achieve a reasonable profit. It was considered that this reasonable profit, before tax, shall be what was achieved by an industry of this type under normal conditions of competition, i.e. in the absence of dumped imports, on sales of the like product in the Union. This profit has been assessed by reference to the profitability of 3,9 % that the Union industry achieved in 2007 as detailed in Table 12 in the provisional Regulation.

• (196) The injury margins established are as follows:

• (197) It is noted that the injury margin for ‘all other cooperating producers’ was determined without using data from the Kito Group, since the Kito Group did not form part of the sample, and in order to be coherent with the way the dumping margin for ‘all other cooperating producers’ is calculated (see Article 9(6) first sentence of the basic Regulation). For the Kito Group, in view of the application of Article 18 of the basic Regulation as mentioned in recital 54, the residual injury margin will apply.

• (198) It is also noted that the underselling margins are higher than the margins of dumping established above in recitals 88 to 93 and therefore the dumping margin should serve as the basis to establish the level of the duty in accordance with the lesser-duty rule.

• (199) In order to ensure equal treatment between any new exporting producers and the cooperating companies not included in the sample, mentioned in Annex I to this Regulation, provision should be made for the weighted average duty imposed on the latter companies to be applied to any new producers which would otherwise not be entitled to a review pursuant to Article 11(4) of the basic Regulation, as Article 11(4) does not apply where sampling has been used.

Custom declaration

• (200) Statistics of the product concerned are frequently expressed in square metres. However, there is no such supplementary unit for the product concerned specified in the Combined Nomenclature laid down in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff ([^E0006]). It is therefore necessary to provide that not only the weight in kg or tonnes but also the number of square metres of the product concerned for imports is entered in the declaration for release for free circulation.

Definitive collection of provisional duty

• (201) In view of the magnitude of the dumping margins found and in the light of the level of the injury caused to the Union industry, it is considered necessary that the amounts secured by way of the provisional anti-dumping duty, imposed by the provisional Regulation, be definitively collected.

• (202) Where the definitive duties are higher than the provisional duties, only the amounts secured at the level of the provisional duties should be definitively collected, while the amounts secured in excess of the definitive rate of anti-dumping duties should be released.

Form of measures

• (203) One interested party suggested that measures take the form of minimum import price (MIP) instead of ad valorem duties. However, an MIP is not suitable for the product concerned as it exists in a multitude of product types, for which prices vary significantly, thus posing a substantial risk of cross-compensation. In addition, it is expected that the product types will further evolve in design and finishing and the MIP would no longer provide the appropriate basis for the level of the duty. Therefore, the request to impose measures under the form of MIP is rejected.

• (204) Another party requested that measures should take the form of import quotas. However, import quotas are neither in line with the basic Regulation nor with the internationally agreed rules. Therefore the request had to be rejected,

HAS ADOPTED THIS REGULATION:

Article 1

Article 2

Amounts secured by way of provisional anti-dumping duties pursuant to Commission Regulation (EU) No 258/2011 imposing a provisional anti-dumping duty on imports of ceramic tiles currently falling within CN codes 6907 10 00 , 6907 90 20 , 6907 90 80 , 6908 10 00 , 6908 90 11 , 6908 90 20 , 6908 90 31 , 6908 90 51 , 6908 90 91 , 6908 90 93 and 6908 90 99 , and originating in the People’s Republic of China, shall be definitively collected. The amounts secured in excess of the amount of the definitive anti-dumping duties shall be released.

Article 3

Where any producer from the People’s Republic of China provides sufficient evidence to the Commission that it did not export the goods described in Article 1(1) originating in the People’s Republic of China during the period of investigation (1 April 2009 to 31 March 2010), that it is not related to an exporter or producer subject to the measures imposed by this Regulation and that it has either actually exported the goods concerned or has entered into an irrevocable contractual obligation to export a significant quantity to the Union after the end of the period of investigation, the Council, acting by simple majority on a proposal by the Commission, after consulting the Advisory Committee, may amend Article 1(2) in order to attribute to that producer the duty applicable to cooperating producers not in the sample, i.e. 30,6 %.

Article 4

Where a declaration for release for free circulation is presented in respect of the products referred to in Article 1, the number of square metres of the products imported shall be entered in the relevant field of that declaration.

Article 5

This Regulation shall enter into force on the day following its publication in the Official Journal of the European Union.

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

ANNEX I

CHINESE COOPERATING PRODUCERS NOT SAMPLED OR NOT GRANTED INDIVIDUAL TREATMENT

ANNEX II

A declaration signed by an official of the entity issuing the commercial invoice, in the following format, must appear on the valid commercial invoice referred to in Article 1(3):

• 1.The name and function of the official of the entity issuing the commercial invoice.

• 2.The following declaration: ‘I, the undersigned, certify that the (volume) of ceramic tiles sold for export to the European Union covered by this invoice was manufactured by (company name and registered seat) (TARIC additional code) in (country concerned). I declare that the information provided in this invoice is complete and correct. (Date and signature)’.

[^E0001]: OJ L 343, 22.12.2009, p. 51.

[^E0002]: OJ L 70, 17.3.2011, p. 5.

[^E0003]: OJ L 143, 31.5.2011, p. 48.

[^E0004]: OJ L 253, 11.10.1993, p. 1.

[^E0005]: OJ L 284, 29.10.2010, p. 1.

[^E0006]: OJ L 256, 7.9.1987, p. 1.