Commission Implementing Regulation (EU) 2021/2287 of 17 December 2021 imposing definitive countervailing duties on imports of aluminium converter foil originating in the People’s Republic of China and amending Implementing Regulation (EU) 2021/2170 imposing definitive anti-dumping duties on imports of aluminium converter foil originating in the People’s Republic of China

(644) The sales of the Union industry to unrelated customers turned from loss making in 2017 to slightly less loss making in 2018, to significantly loss making in 2019 and even more loss making in the IP (-9,6 %). It is of note that one of the sampled Union producers started restructuring during the IP. The cost of this restructuring, including severance payments negatively impacted the second part of the IP. However, even without these extraordinary expenses, the sampled producers would still be loss making at the rate of -5,6 % in the IP.

(645) It is clear that the Union industry was already injured in 2017. This is not surprising considering the market share of the Chinese imports (18 % in 2017) at prices not only below the Union industry’s prices but also below its costs of production. The costs of the Union producers increased more than their prices, which led to the decrease in profitability of the Union industry. The Union industry was unable to raise prices at the same rate as costs were increasing because of the downward pressure caused by imports from the PRC (both in terms of volumes and low prices). Indeed, throughout the period considered, Chinese prices were consistently low and significantly below Union industry prices (see Tables 3 and 7), limiting price increases. This resulted in price suppression and decreasing profitability, which continued during the IP. Indeed, following a slight increase of 1 % in 2018, Chinese prices decreased by 3 % in 2019 and then 0,7 % in the IP. They remained far below the price level achieved by the Union industry. This is also evidenced by the significant undercutting margins stated in recital (614).

(646) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed negatively over the period considered in line with the evolution of the profitability.

(647) Investment decreased over the period considered by 23 %. Ambitious investment plans were halted due to the insufficient profitability. Less ambitious plans were implemented in their stead.

(648) The return on investments is the profit in percentage of the net book value of investments. It developed negatively over the period considered from -2 % in 2017 to -24 % in the IP. Such development follows the decreasing profitability of the Union industry.

(649) As follows from the indicators in recital (642), it is becoming increasingly difficult for the sampled Union producers to raise capital for investment. With returns on investments falling so quickly, the sampled producers’ ability to raise capital in the future is in even greater jeopardy.

(650) During the period considered, imports of ACF from the PRC, which were already significant in 2017, increased significantly both in absolute (+ 21 %) and relative terms (+ 5 percentage points in market share) while consumption in the EU decreased by 6 %. During the investigation period, the import prices of the sampled exporting producers undercut Union prices by 10,8 % on average. Regardless of the specific undercutting found, as regards the sampled exporting producers, the Commission also observed that Chinese prices were consistently low and significantly below Union industry prices during the entire period considered (see Tables 3 and 7). The Union industry was unable to raise prices to the same extent as costs were increasing because of the downward pressure caused by imports from the PRC (both in terms of volumes and low prices).

(651) Already at the beginning of the period considered, the Union industry showed signs of injury. This not surprising, considering the market share of Chinese imports of 18 % in 2017 and their price being significantly below the price of the Union industry (see Tables 3 and 7).

(652) All macroeconomic indicators, such as production, capacity, capacity utilization, sales volume in the EU market, market share, employment and productivity, showed a negative trend over the period considered. Similarly, virtually all microeconomic indicators, such as sales prices in the EU free market, cost of production, labour costs, profitability, closing stocks, cash flow, investment and return on investments, showed a negative trend over the period considered. The same injury indicators also developed negatively when looking at the period 2017-2019, that is, before the start of the COVID-19 pandemic. For many indicators the situation in the IP was better than in 2019. This is mainly due to the lower level of imports from the PRC, that was caused by the pandemic outbreak at the end of 2019 and beginning of 2020. This further emphasises the impact these imports have on the overall situation of the Union industry.

(653) On the basis of the above, the Commission concluded that the Union industry suffered material injury within the meaning of Article 8(4) of the basic Regulation.

(654) In accordance with Article 8(5) of the basic Regulation, the Commission examined whether the subsidised imports from the country concerned caused material injury to the Union industry. In accordance with Article 8(6) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry and ensured that any possible injury caused by factors other than the subsidised imports from the country concerned was not attributed to the subsidised imports. The following potential factors were identified: consumption; COVID-19 pandemic; alleged lack of investment; restructuring of the Union industry; high production costs in the Union; imports from third countries; export performance of the Union industry.

(655) The deterioration in the situation of the Union industry coincided with the significant penetration by imports from China, which consistently undercut the Union industry’s prices and suppressed Union market price. As mentioned in recital (614), the import prices of the sampled exporting producers undercut Union prices by 10,8 % on average.

(656) The volume of imports from the PRC increased (as shown in Table 2) from around 36 660 tonnes in 2017 to around 44 276 in the investigation period, an increase by 21 %. In turn, the market share increased by 29 %, i.e. from 18 % to 23 %. Over the same period (as shown in Table 5), the Union industry sales on the free market decreased by 15 % and its market share on the free market fell from 63 % to 57 %, a decrease by 10 %.

(657) The situation in the period 2017-2019 is even more telling as Chinese imports increased by 27 % (from 36 660 tonnes to 46 595 tonnes) reaching a 24 % market share while the free market share of the Union industry dropped to 56 % (a fall of 12 %). Indeed, despite a decrease in consumption between 2018 and 2019, Chinese imports continued to increase and gain market share from the Union industry.

(658) The prices of the subsidised imports decreased by 3 % over the period considered (as shown in Table 3) from 2 869 to 2 781 EUR/tonne. In comparison, the Union industry prices decreased only by 1 % over the same period, from 3 396 EUR/tonne in 2017 to 3 359 EUR/tonne in the investigation period. Hence, although starting from a lower price level in 2017, Chinese prices decreased more (-88 EUR/tonne) than Union industry prices (-37 EUR/tonne) over the period considered. Also, in the period 2017-2019, the decrease in Chinese prices amounted to 2 % while the Union industry prices increased by less than 1 % (12 EUR/tonne).

(659) The pressure exerted by the subsidised imports thereby caused significant price suppression to the Union industry. The Union industry was unable to raise prices at the same rate as costs were increasing because of the downward pressure caused by imports from China (both in terms of volumes and low prices). Indeed, the degree of such downward pressure is, to the least, apparent from the fact that throughout the period considered, Chinese prices were consistently low and significantly below Union industry prices and cost of production, limiting the possibility of increasing prices (see recital (614)) This resulted in a drop of the profitability of the Union industry.

(660) The difference between 2019 and the IP is particularly telling in terms of the nexus between the imports from the PRC and the situation of the Union industry. When the imports diminished following to the disruption of production and exports in the PRC due to the pandemic, production of the sampled Union procures, sales, unit cost of production and profitability of the Union industry improved slightly (disregarding extraordinary restructuring costs).

(661) On the basis of the above, the Commission concluded that the imports from China caused material injury to the Union industry. Such injury had both volume and price effects.

(662) One exporting producer argued that ACF being replaced in certain segments by other products could be the source of injury of the Union industry.

(663) Indeed, as indicated in recital (605), the Union consumption contracted in 2019 and in the IP. Nevertheless, imports from the PRC increased throughout the period considered, whilst consumption decreased. Indeed, when demand is decreasing, one would normally expect all producers to be affected in a similar way or even exports to decrease more in comparison to domestic (Union) sales in view of the proximity between domestic producers and customers. Still, throughout the period considered, the imports from the PRC increased by 21 % (27 % in 2019) whilst the Union sales to the free market decreased by 15 % (16 % in 2019). Furthermore the slight improvement of some indicators discussed in recital (630) coincided with the continuous consumption contraction as seen in Table 2. The only significant difference between these two periods were lower levels of cheap imports from the PRC due to the pandemic.

(664) Following the final disclosure the GOC argued that the market contraction should be considered a cause of injury as the market decreased by 6 % during the period considered. The Commission had already taken the market contraction into account and the GOC did not provide any evidence to rebut the Commission’s conclusion in the previous recital. The Commission therefore rejected that claim.

(665) The COVID-19 pandemic that started in the first half of 2020 affected the situation on the EU market in various ways. As mentioned in recital (605)Error! Reference source not found., the overall consumption was not affected while there was a slight decrease in the imports from the PRC.

(666) As explained in recital (657), the subsidised Chinese imports had already increased steadily on a year-on-year basis in the period 2017-2019 leading to an increase of over 27 % until the start of the COVID-19 pandemic in the first half of 2020. In other words, the material injury caused to the Union industry by the subsidised imports had already materialised as evidenced by the negative development of all macro- and microeconomic indicators in the period 2017-2019 before COVID-19 came into the equation. Furthermore, as discussed in recital (636), lower volume of imports from the PRC due to the pandemic at the beginning of 2020 had positive impact on some of the injury indicators. This further exemplifies a strong nexus between the imports and the injurious situation of the Union industry.

(667) In view of the above, the Commission concluded that the COVID-19 pandemic did not contribute to the material injury suffered by the Union industry.

(668) Following the final disclosure the GOC argued that the Commission insufficiently investigated the effect of the COVID-19 pandemic. The GOC argued that the pandemic caused a demand side-crisis, which would also be visible in the 6 % Union GDP decrease in 2020. The Commission’s own predictions in terms of an expected recovery of the economy would demonstrate the temporary effect of the pandemic.

(669) With reference to recital (666), where the Commission summarises the COVID-19 pandemic impact, the Commission rejected this claim.

(670) One exporting producer and two users argued that lack of investment by the Union industry in their production facilities is one of the reasons for the injury.

(671) It is true that, as mentioned in recital (647), some ambitious investments of the sampled Union producers were halted. However, this was the result of the injurious situation of the Union industry, not its cause. Despite the dire situation of the Union industry throughout the period considered, the investigation has shown investments into inline quality control mechanisms and other upgrades to the existing machine park. Furthermore, several companies invested into R & D to produce thinner ACF and ACF for electric car battery production. This demonstrates that the Union industry adapted to market requirements, within their financial possibilities.

(672) While it cannot be excluded that additional investments in the latest technology may be needed to ensure the long-term sustainability of the Union industry, the Commission concluded that the state of the Union industry’s production equipment and the development of its operating costs do not attenuate the causal link established between the subsidised imports and the material injury suffered by the Union industry.

(673) In view of the above, the Commission concluded that limited investment did not contribute to the material injury suffered by the Union industry.

(674) The consortium of importers requested that its comments made in the separate anti-dumping investigation should be incorporated into this anti-subsidy investigation, and also commented on the final disclosure in this procedure. The consortium of importers claimed that the Commission reiterated its conclusions from the provisional Regulation without providing evidence capable of rebutting the consortium’s argument that the Union industry’s injury resulted from a lack of investments, which resulted in an inability to provide the thin foil. The consortium claimed that while it had provided all the evidence it could reasonably gather, it would be for the Commission to verify the accuracy of these claims and, if need be, to further investigate these issues by requesting additional information from the Union producers. The lack of investments in the new machinery and technologies resulted in the Union producers’ lines of production becoming obsolete as the vast majority of aluminium foil plants in the EU are over 20 years old.

(675) Contrary to what the consortium alleged, the Commission has verified the quality testing results specifically for ACF< 6 during the RCCs regarding the sampled Union producers, as the consortium had claimed quality issues with the thinner foils. While the Commission has acknowledged that some investments were halted, it has also verified the investments made into existing machine parks and the resulting quality tests. The Commission therefore rejected the claim that it did not make the necessary effort to assess the claims of the consortium, further to the evidence provided.

(676) One user pointed to Union producers exiting the market and restructuring as a reason for the Union industry’s injurious situation.

(677) Most of the market exits noted by the user took place before the period considered. There were no reasons indicating that these closures would occur under fair market conditions. If anything, similarly to the situation regarding investments, closures of production facilities and business are a result of the injurious situation of the Union industry, not its cause. As part of restructuring and adaptation, such closures usually alleviate, not worsen the injury.

(678) It is true that cost of restructuring of one of the sampled Union producers in the second half of the IP may have had an impact on some indicators, such as cost of production, cost of employment and profitability. This is why the Commission also considered the injury picture disregarding those costs. Even without those cost elements, it is clear that the Union industry suffered injury throughout the period considered including in the IP. These claims were therefore rejected.

(679) In view of the above, the Commission concluded that restructuring of the Union industry did not contribute to the material injury suffered by the Union industry.

(680) Following the final disclosure Xiamen Xiashun argued that the restructuring of the Union industry and the ceasing of production by Novelis Lüdenscheid cannot be disregarded. Xiamen Xiashun claimed that the final disclosure did not specify how the restructuring costs were actually considered and accounted for and that the Commission did not provide more explicit reasoning.

(681) Contrary to Xiamen Xiashun’s claim the Commission has clearly stated how it assessed the restructuring of the Union industry within the calculation of the injury indicators. As described in recitals of the final disclosure, in recital 510 of the final disclosure the Commission explained that first it regarded the restructuring as a part of the adaptation as a consequence of the injury and in principle included the restructuring in its calculation. Further in recital 511 of the final disclosure the Commission explained that the Commission made a parallel calculation fully disregarding the costs of restructuring of one of the sampled Union producers and assessing if this would have had an impact as repeated in recital (678) above. The Commission therefore rejected the claim by Xiamen Xiashun as it had not only described the applied method, but also stated that even if those costs were to be excluded the conclusion on the injury factors and causality would not change.

(682) One user argued that high wages and energy prices are the reasons for the injurious situation of the Union industry.

(683) The Union producers reduced from 2017 to the IP the number of employees in production and administration, decreasing their overall labour cost substantially, to maintain competitiveness with a smaller market share. As demonstrated in Table 8, the average cost per employee increased in the IP, but this was mainly due to the restructuring of one of the sampled producers. Disregarding these extraordinary expenses, the average cost per employee remained relatively stable throughout the period considered whilst the sampled Union producers were stillloss making.

(684) As to the costs of energy, they represent a relatively low portion of the cost of production (around 3 %) and as such do not have a significant impact on the increase of cost of production indicated in Table 7. Whilst energy cost per tonne of ACF produced by the sampled Union producers increased by 12 % throughout the period considered, they are partly due to the decreased volume of production and in any case, considering the potion of energy cost in the cost of production, cannot be responsible for the cost of production increase in Table 7.

(685) One user argued that the lack of vertical integration is a source of material injury to the Union industry.

(686) The Commission noted that lack of vertical integration does not break the chain of causation as this factor has not changed throughout the period considered. Furthermore, not all Chinese exporting producers are vertically integrated either. This claim was therefore rejected.

(687) In view of the above, the Commission concluded that wages, energy costs and lack of vertical integration did not contribute to the material injury suffered by the Union industry.

(688) Following the final disclosure the GOC argued that the Commission did not sufficiently take into account the labour costs, which increased by 25 % from 2019 to the end of the IP.

(689) Contrary to the claim of the GOC, the Commission analysed the effect of increased labour costs and concluded that this has to be seen together with the decrease in personal of the Union producers, which has resulted in extraordinary costs. Disregarding the extraordinary expenses for adapting the cost per employee remained relatively stable as indicated already above in recital (683). The Commission therefore rejected this claim.

(691) Imports from third countries were relatively limited. Average prices of imports from third countries were consistently above the Chinese prices throughout the period considered. They were only slightly below the Union prices in 2017 and 2018 and then surpassed them in 2019 and the IP. Their volumes decreased (-21 %) over the period considered. Considering the contraction of the consumption, their market share remained at around 5 % throughout the period considered. Their prices increased by 12 % during the period considered.

(692) On this basis, the Commission concluded that the evolution of imports from other countries over the period considered did not contribute to the material injury suffered by the Union industry.

(694) Exports of the Union industry increased by 7 % over the period considered from 57 356 tonnes in 2017 to around 61 811 tonnes in the investigation period.

(695) The average price of these exports first increased by 4 % in 2018 before progressively decreasing to a lower level than in 2017 (-3 %) in the IP. The average price of these exports remained consistently above the price that the Union industry could achieve on the EU market.

(696) In view of the price levels of the Union industry exports to third countries, the Commission concluded that the export performance did not contribute to the material injury suffered by the Union industry.

(697) There is a clear nexus between the deterioration of the situation of the Union industry and the increase of imports from the PRC.

(698) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the subsidised imports. None of the factors contributed, alone or in combination, to the negative developments of the injury indicators observed in the period considered.

(699) On the basis of the above, the Commission concluded at this stage that the subsidised imports from the country concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the subsidised imports and the material injury.

(700) There are eleven known groups of companies producing ACF in the Union. The Union industry employs over 2 000 workers directly with many more relying on it indirectly. The producers are widely spread throughout the Union.

(701) The absence of measures is likely to have a significant negative effect on the Union industry in terms of further price suppression, lower sales and further deterioration of the profitability. The measures will allow the Union industry to reach its potential on the Union market, recover lost market share, and improve profitability to levels to be expected under normal conditions of competition.

(702) Consequently, the Commission concluded that the imposition of measures is in the interest of the Union industry and its upstream suppliers.

(703) Nine users representing the flexible packaging industry, as well as construction material industry, replied to the questionnaire. The nine companies account for around 27 % of the Chinese imports during the IP. Three other users provided comments, but did not provide questionnaire replies. Based on these replies, the Commission did not find a significant dependency on ACF imported from the PRC. For most of the cooperating users, ACF from the PRC represented between zero and 7 % of the costs of production of the products that consumed ACF. The exception to this were two users (one in the construction and another in the packaging sector), who import [80 – 95] % and [85 – 100] % of their ACF from the PRC, representing, respectively, [15 – 25] % and [20 – 30] % of their cost of the relevant production.

(704) Six users argued that the Union producers could not provide the same quality ACF as the Chinese producers due to a lack of investment in new machinery and in-line quality check equipment. While it is true that Union producers in general have an older machine park than Chinese producers, the Union producers have made investments and also apply in-line quality detection tools. As export figures of the Union industry show, Union producers are also able to compete successfully in third country markets, proving that their product is generally not inferior when compared to the global standard. Whilst some Chinese market leaders have facilities capable of producing efficiently high quality product, the quality analysis provided by a user has shown that this is not true for all of the ACF industry in the PRC and all its exporting producers.

(705) Three users argued that Union producers would not supply large widths or at least would have supply constraints for specific dimensions. The investigation found that Union producers could provide all widths requested by the market. Specific widths might be more cost efficient than others, depending on the maximum width of the rolling mill, which is then reflected in the price negotiations, however this is normal business practice.

(706) Three users argued that Union producers would not be able to provide quality ACF with a gauge below 6 microns. As explained in recital (63) the Commission found that the Union industry not only has existing capacity and made commercial sales in this segment, but that it also invests in the production of gauges below 6 microns, which was a developing market segment with a relatively low consumption during the IP.

(707) Two users argued that countervailing duties would cause supply chain interruptions. While peak demand in specific situations can cause higher lead times and Chinese producers can have more financial flexibility for stocking raw materials, it is important to note that interruptions in the supply chain from the PRC can equally occur, as has been the case due to COVID 19, which makes the survival of the Union producers an important factor for supply stability in Europe. In any event, as indicated in table 4, there is a substantial spare production capacity in the Union available to the users.

(708) Two users argued that countervailing duties would jeopardise the competitiveness of the converter industry on the Union market, competing against producers from countries outside the Union, as cost increases could not be passed on to their customers. European converters could therefore shift production to outside of the Union. However, no specific evidence of inability to pass on the additional costs to the converters was provided.

(709) Two users argued that the duties would contravene the European sustainability goal as the use of thinner ACF would help to reach these goals. However, while the Commission already concluded above (see recital (63)) that the Union industry is perfectly in position to produce thinner ACF, it should be noted that the European Union cannot build a sustainable green policy, of which greener insulation materials for construction represent an element, on heavily subsidised and injurious imports from the PRC.

(710) One user argued that duties would distort the market as two of the largest ACF producers, who are also converters, would have a captive consumption greater than 70 % of their production. In view of the number of Union producers, it is highly unlikely that the captive consumption of two integrated ACF producers, who are also converters, would distort the market. Moreover, there is significant spare ACF capacity available in the EU. Finally, not imposing anti-subsidy measures for this reason would mean favouring one business model (non-integrated production) over the other.

(711) One user argued that instead of imposing duties, state-aid could be offered to the Union industry. The Commission noted that financial aid is, however, not the right instrument to counter injurious subsidisation.

(712) In light of the above, the Commission concluded that there is no uniform interest of users either in favour or against the imposition of the measures. Those users who argued against the imposition of the measures may face certain negative consequences.

(713) Manreal argued that measures would not benefit the Union producers. Instead they would benefit the producers of ACF in Turkey, Thailand, Brazil or Russia as the users would buy from these countries instead of the Union producers.

(714) However, Manreal did not substantiate why the Union producers would not be able to compete with producers from other countries under fair conditions.

(715) In addition, Manreal argued that in case the users would pass on their cost to their customers, this would put into jeopardy the competitiveness of their customers. The company did, however, not substantiate this claim further beyond making this general remark.

(716) Manreal further argued that in recital (354) of the Regulation (EU) 2021/983 the Commission indicated that it would impose measures in favour of integrated producers. It requested the Commission to investigate the likely effects of the measures “in the EU fair competition”.

(717) This interpretation of Regulation (EU) 2021/983 is incorrect as the Commission merely stated that the non-imposition of measures would favour non-integrated users. Indeed, in the absence of measures they can purchase dumped ACF, whereas integrated users producing ACF in the Union would not benefit from this unfair advantage. As regards Manreal’s request to investigate the likely effects of the measures “in the EU fair competition”, the Commission understands that Manreal claims the duties would constitute an unfair competitive advantage for integrated Union producers towards non-integrated businesses. The Commission recalled that in accordance with Article 31(1) of the basic anti-subsidy Regulation the need to eliminate trade distorting effects of injurious subsidisation and to restore effective competition is given special consideration in the Commission’s assessment of the Union interest.

(718) Manreal further claimed that the Commission breached its rights of defence as Manreal did not have access to the analysis mentioned in recital (704).

(719) The Commission is under the obligation to protect confidential business information of the parties, balancing access to that information with the interest of other parties to exercise their rights. A detailed quality analysis of products from different suppliers from the PRC and the Union over multiple years can rightfully be claimed as a business secret, which is not shared with competitors. Therefore, not sharing business secrets did not cause a breach Manreal’s of rights of defence.

(720) Two companies, Gascogne and Manreal, argued that the statement of the Commission that there would be no uniform interest of the user against measures in recital (712) would be incorrect as all comments submitted by users were against measures.

(721) For its assessment the Commission may also rely on confidential data submitted by users as questionnaire replies. From the data it follows that there are two users, which purchase a high percentage of their ACF from China and for whom ACF from China represents a very high part of their raw material costs but the other users mainly purchase ACF from Union producers and would not be affected in the same way by the measures. Revealing details about which percentage individual users purchase from concrete ACF producers would expose their supply chains. The parties can, however, already make their argument based on the information that users rely to a different extend on imports from the PRC.

(722) In light of the above, the Commission confirms its assessment that there is no uniform interest of users either in favour or against the imposition of the measures, even if users who argued against the imposition of the measures, in particular the two users, for whom ACF represents a high percentage of their cost of production may face certain negative consequences.

(723) Walki argued that the general disclosure document did not portray the users’ interest correctly or fairly. Walki further claimed that the conclusion of the Commission on the lack of “uniform interest” of users based on the fact that “users rely to a different extent on imports from the PRC” is a misleading and discriminatory analysis against users.

(724) The Commission concluded that there was no uniform interest of users due to the highly different levels on which users rely on ACF originating in the PRC. With this statement, the Commission did not deny that all cooperating users opposed the imposition of anti-dumping duties.

(725) Walki further claimed that the Commission has not responded to its request for a more adequately reasoned analysis relating to crucial elements of the Union interest. Walki requested a correction of the Commission’s statement with regard the reference to the arguments of users on the fact that the Union industry cannot provide the same quality ACF as the Chinese producers due to a lack of investment. Walki argued that six users submitted a common statement claiming “that the Applicant producers do not have the production capability to supply certain important specifications of ACF. Their inability to commercially supply these specifications to the Union Users is attributed most clearly to the Applicants’ long-term failure to invest in the production equipment and technology necessary to extend their existing ACF production range in order to supply the thinner specifications needed by these Users.”

(726) Indeed, six users submitted a common statement claiming that the Union industry had failed to invest, further to the four users which had already provided this argument individually. However, the Commission already addressed this claim on substance in sections 5.2.3 and 6.2. of the Regulation 2021/983. At this stage, no user has provided new factual information, but just reiterated the same claim. The Commission therefore confirmed its conclusions.

(727) Walki further claimed that the Commission wrongfully concluded that the Union’s products are not inferior on the basis of the Union producers’ general ability to export and compete successfully in third country markets. Walki argued that this would only apply to the ability to produce quality thicker foil above 20 microns. It also claimed that the Commission did not indicate this would include all the thinner foils, which are at the centre of the Union supply constraint issue.

(728) Walki further claimed that the statement that not all Chinese producers can produce efficiently high-quality product, has no bearing on the users’ argument that the Union industry is not capable of efficiently producing high quality thinner foil.

(729) The Commission cross-checked sales data of the Union producers at hand, which shows that there are exports of ACF below 20 microns to third countries. Walki’s argument that the Union producers would only be competitive with ACF above 20 microns does therefore not stand.

(730) Walki further claimed that the Commission’s assessment of the spare production capacity does not equate to an ability to produce quantities of quality thin ACF.

(731) The Commission duly analysed the capacity to produce thinner foil, which is limited by the machines capable of the last rolling step. Some Union producers presented test results, showing that the test roll production for ACF< 6 was successfully meeting the requirements of the respective customer. The Commission further points to its assessment that ACF< 6 is a developing new market and due to the very small demand during the IP, naturally not all Union manufacturers adapted their machine park yet for this market segment.

(732) Walki further claimed that key elements of positive evidence submitted by Walki during the latter course of the investigation have been totally ignored or mistakenly represented. The Commission considered that claim to be inaccurate. The Commission took all arguments and evidence into consideration, but for confidentiality reasons, some very specific information could not be disclosed in the regulation.

(733) Manreal claimed that the Commission breached the principle of good administration. Manreal argued that the Commission disregarded, with no reasoning, all Manreal’s comments, claiming that the Commission used an unfair rebuttal technique by pointing out that Manreal did not substantiate its claims sufficiently.

(734) Contrary to Manreal’s claim, the Commission fulfilled its obligation to assess, for each of Manreal’s comments, whether it was sufficiently substantiated, and has explained the reasons why it was not in each case in the recitals mentioned by Manreal. The Basic Regulation does not foresee an obligation of the Commission to further investigate comments which are not sufficiently substantiated.

(735) Therefore, the Commission rejected this claim.

(736) In the separate anti-dumping investigation Effegidi requested an end-use exemption for ACF for the use in the production of films for cable shielding and wine bottle capsules. Effegidi extended this request to this procedure.

(737) The request is based on the percentage of the costs ACF represents in the production costs of films for cable shielding and wine capsules and the impact the measures would have on the company. According to Effegidi, films for cable shielding and wine capsules are niche markets and their consumption of ACF is equally negligible. This implies that an exemption from the duties for final use would not undermine the overall effectiveness of the anti-dumping duty.

(738) However, the investigation revealed that Effegidi does not only produce the two products for which it requested the end-use exemption, but its portfolio includes a variety of other products like cable films which do not incorporate ACF, as well as other food and non-food packaging, some of which incorporate ACF. The Commission could therefore not determine the overall impact of the anti-dumping duties on the profitability of the company based on the data provided by Effegidi. Consequently, in the final disclosure, the Commission rejected the end-use exemption.

(739) Following final disclosure, Effegidi provided the Commission with its financial statements for the years 2019, 2020 and for the first half of 2021. Effegidi further requested guidance from the Commission on what further documents it needed to provide in order to be able to be granted the end-use exemption.

(740) The Commission found that the information sent after the final disclosure was not sufficient to allow the Commission to assess the overall impact of a potential exemption on the effectiveness of the duty. Effegidi did not provide any information about the cable shield and wine capsules industry.

(741) The Commission could therefore not assess whether the end use exemption would be in the Union interest and therefore confirmed its rejection of Effegidi’s exemption request.

(742) A consortium of five unrelated importers provided comments on initiation. However, only one unrelated importer, representing [15 – 25 %] of the imports from the PRC, submitted a reply to the importers’ questionnaire.

(743) The consortium argued that the Union producers are not able to manufacture the full spectrum of ACF in the required quality and volume due to technical constraints originating in a lack of vertical integration of most Union producers. This would cause higher costs of production, lower quality, dependency on the raw material (foil stock) market and longer lead times due to a longer supply chain. They further claimed that a lack of investment, especially on in-line detection systems, has led to quality issues. Therefore, the consortium expects a supply shortage, especially for thin gauge ACF, if measures were imposed. This, together with higher prices, would undermine the competitiveness of the Union converters (users).

(744) As discussed in Section 4.5.2.1, the Union industry appears to have sufficient spare capacity, even taking into account the high level of captive use of two big Union producers. Contrary to the claim of the consortium of importers, investments in in-line quality control have been made and the data does not consistently demonstrate a higher quality of Chinese ACF.

(745) In light of the above, the Commission concluded that the imposition of measures would not necessarily be in the interest of importers. However, it further assessed their likely effects when weighing the different interests at stake (see Section 4.4).

(746) Following the final disclosure the consortium of importers reiterated the claim that the Union producers are not able to meet the existing ACF demand especially in the market segment of thin gauge ACF, in which they currently import from the PRC to meet the demand. The consortium claimed that it would take at least 2 years to make the production of thin gauge ACF effective and operational and that the Union producers do not appear to meet the demanded quality standards to replace current imports from China in this market segment.

(747) Further to the fact that the consortium has not substantiated why it would take 2 years to make the thin gauge ACF production operational, the Commission has already concluded in section 4.5.2.1 of Regulation (EU) 2021/983 that the Union industry appears to have sufficient spare capacity. Moreover, the Union industry has demonstrated with sales and test roll production to be able to meet the clients’ demand as described in recitals (50) and (51) of Regulation (EU) 2021/983.

(748) In light of the above, the Commission confirmed its conclusion that the imposition of measures would not necessarily be in the interest of importers. However, it further assessed their likely effects when weighing the different interests at stake (see Section 6.4).

(749) Following the final disclosure, the consortium claimed that the Commission completely disregarded the fact that the gradual movement of the demand into thinner gauges of ACF resulted in an increase in demand for ACF of ≤ 7 microns. Furthermore, the Commission underestimated the fact that it would take at least two years to make the production of thin gauge ACF effective and operational in the EU.

(750) Further, the consortium claimed that the Commission failed to provide clarification on how the substantial spare capacity of the Union industry can satisfy the demand of thin gauge ACF.

(751) The consortium also reiterated that the Union industry cannot meet the quality standards for thin gauge ACF in terms of porosity and runability and stressed that the rolling mills producing the ACF are the same as for the car battery industry, further reducing the capacity for ACF. It claimed that overlooking of those aspects led the Commission to the erroneous conclusion that the imposition of duties is in the Union interest.

(752) As explained in recital (51) of Regulation (EU) 2021/983, the Commission assessed the capacity of the Union industry to produce thinner ACF, specifically ACF< 6 by assessing the capacity of the last rolling mill step, necessary to reach this thin gauge. The previous rolling steps proved to have sufficient spare capacity. Consequently the bottleneck for the production of ACF< 6 is in the last rolling step. The Commission has clarified how the Union industry can satisfy the demand of thin gauge ACF. The argument that it would take at least two years to make the production of thin gauge ACF effective and operational only applies to new capacities that the Union industry would install as a result of a restored fair price competition and a further increasing demand. As already the existing capacities can satisfy the expected demand in the near future, potential additional future capacities have not been taken into account in the Commission’s calculation. It is not relevant that new capacities would require a period before becoming operational. The Commission therefore rejected the claim.

(753) In line with Article 31(1) of the basic Regulation, the Commission assessed the competing interests and gave special consideration to the need to eliminate the trade distorting effects of injurious subsidy and to restore effective competition.

(754) As far as an increase in prices is concerned, the investigation revealed that Chinese prices were undercutting Union prices on average by 10,8 % and that the price suppression lead to a deterioration of the situation of the Union industry. Should prices rise again to sustainable levels, the Commission considered that such increase would be limited in view of the level of competition on the Union market. As already mentioned in Section 4.5.2.1, the Union industry has sufficient spare capacity. Accordingly, the negative effect on users would also remain limited. None of the specific arguments raised by the users and importers and discussed in sections 6.2 and 6.4 change this conclusion.

(755) When assessing the significance of negative effects for the importers, the Commission first noted that the level of cooperation was relatively low as only one out of the five cooperating importers provided data.

(756) Manreal argued that the analysis of the market and of the Union interest undertaken in Regulation (EU) 2021/983 was no longer valid, as a result of the drastic increase of prices and speculation in the commodities market, which are consequences of the investigation and the Covid-19 pandemic. The converting packaging industry is strongly hit not only by a 40 % price increase for aluminium, but also by a 40 % price increase for kraft paper and by container transport costs which have increased by 400 % The average supply time for paper deliveries has increased from 3-4 weeks to 4 months. In some supply contracts, suppliers claim force majeure and deliver with a delay of 6 months while asking for 20 % higher prices than at the time of the order.

(757) Supporting Manreal’s arguments, Walki, Gascogne, and Effegidi also emphasized that post IP the market situation has fundamentally changed leading to supply shortages not only in ACF, but also their other raw materials. According to Gascogne, the aluminium price on the London Metal Exchange increased by 30 % from October 2020 to May 2021. Also under the current situation only 1 major Union producer appears to be able to supply new orders without a lead time of several months. Effegidi claimed that, according to quotes from Union producers in July 2021, supply of ACF for its production would not be available before 2022.

(758) Another user, Alupol, argued that starting from December 2020 they noticed poor interest in contracts from the Union producers and even a 2-year supply contract concluded with one of the Union producers was terminated by the producer after half a year, which shows capacity constraints. Walki provided additional evidence relating to requests of 6,35 micron ACF, demonstrating that the supply difficulties faced in 2021 are continuing.

(759) Also the consortium of importers argued that since the beginning of the investigation ACF prices have increased by 25 % and delivery times have increased from an average of 2 months to 4 months. Also the current supply shortage situation leads to integrated companies supplying their related entities on a preferential basis, leaving less capacity for the open market. The consortium expects the duties to disrupt supply-chains and lead to a supply shortage for the entire range of ACF, but in particular for gauges below 6 microns.

(760) While these changes in the market indeed have an impact on the different interests of producers, users and importers, they are caused by the exceptional situation of the COVID-19 pandemic and the following strong economic recovery, which has caused an international transport shortage and supply shortages. Accordingly, it may require certain time for the markets to adapt until the economic recovery and growth would normalize and demand and supply would be in balance again, including in the ACF sector.

(761) Manreal further argued that in line with Article 11 TFEU protection against subsidised imports should be balanced with other goals of the Union, such as environmental protection, and concluded that the imposition of measures will have a very negative impact on the environment. Manreal argued that irrespective of possible negative impacts on jobs or industrial policy, the disappearance of more polluting Union producers would be good for the EU environment. Consequently, Manreal requested the Commission to include in the investigation the likely effects of the measures on the environment.

(762) The Commission noted, first, that Manreal has not substantiated in which way Union producers are more polluting than Chinese producers. Moreover, while the Union sets high environmental standards for it producers, the purpose of Article 11 TFEU is not to prevent economic activity but to integrate environmental protection requirements into the policy guiding the economic activity. Manreal’s suggestion to reduce emissions in the Union by allowing its industry to be wiped out by unfair competition is not only incompatible with the EU’s environmental goals but would go against number of other policies. Consequently, Manreal’s request to investigate the environmental impact of such a scenario was rejected.

(763) Manreal further pointed to recital (355) of the provisional Regulation in the anti-dumping procedure, in which the Commission stated, in reply to Manreal’s previous argument that State aid could be a more suitable measure than imposing duties, that financial aid is not the right instrument to counter injurious dumping. Manreal argued that this is a policy choice that should not be adopted without consulting the Directorate-General for Competition (‘DG COMP’). Manreal further claimed that the Commission’s argument would presuppose that any aid granted to Union producers would not be authorised by DG COMP.

(764) The Commission recalled that Article 15(1), first paragraph, of the basic Regulation stipulates that where the facts as finally established show that the existence of countervailable subsidies, and injury caused thereby, and the Union interest calls for intervention, a definitive countervailing duty shall be imposed by the Commission. Indeed, the Commission cannot abstain from countering demonstrated injurious subsidisation by Chinese exporters through the legal instruments at the Commission’s disposal merely because Union producers may also benefit from State aid. Moreover, State aid is granted by the Member States, not the Commission.

(765) Consequently, none of the arguments following Regulation (EU) 2021/983 raised by the users and importers also in the context of the anti-subsidy investigation changed the Commission’s conclusion.

(766) Several parties suggested that the Commission, together with the comments to the final disclosure, assessed a potential suspension of the duties according to Article 24(4) of the basic anti-subsidy Regulation. The potential suspension of the duties may be considered by the Commission in due course as provided by Article 24(4) of the basic anti-subsidy Regulation.

(767) Following the final disclosure the GOC argued that the global and EU economy are facing ongoing grave supply chain disruptions. In view of this situation it would not be in the Union interest to impose measures at this time. The GOC also asked the Commission to assess a suspension of potential duties.

(768) As explained above in recital (760) the COVID 19-pandemic has had negative effects on the supply chains. However, this is a temporary situation, it is not considered by the Commission to cause a permanent overriding interest against the imposition of measures.

(769) Following the final disclosure the consortium of importers argued that the imposition of definitive countervailing duties in addition to anti-dumping duties is clearly against the interest of importers and users in the EU since there was an increasing demand in ACF of ≤ 7 microns, the increase of battery foil production would decrease available capacity for other ACF and this would cause a relocation of production capacities of the converting industry outside of the EU.

(770) The Commission had already concluded that the spare capacities of the Union producers would allow to fulfil the demand of ACF for thinner gauges and for car battery foil in the upcoming years. Anti-dumping duties are not calculated in a way that would automatically remedy also the subsidisation of imports Especially different exporters can be involved differently in dumped imports and subsidisation. The Commission therefore rejected the claim that it would be against the Union interest to impose countervailing duties, in case of the imposition of anti-dumping duties.

(771) Following the final disclosure Xiamen Xiashun argued it would be in the Union interest to exclude electric car battery foil from the scope as the Union producers would not have the capacities to fill the demand in the short- to medium term.

(772) As Xiamen Xiashun did not provide new evidence for this claim and the Commission had already analysed the capacity of the Union producers in light of the short- to medium term demand, the Commission rejected this claim.

(773) On the basis of the above, the Commission concluded that there were no compelling reasons to conclude that it is not in the Union interest to impose definitive countervailing measures on imports of ACF originating in China.

(774) Following final disclosure, within the deadline specified in Article 13(2) of the basic Regulation, one exporting producer submitted an offer for a price undertaking: Jiangsu Zhongji Lamination Materials Co., Ltd., together with its related trader Jiangsu Zhongji Lamination Materials Co., (HK) Limited.

(775) According to Article 13 of the basic anti-subsidy Regulation, the price undertaking offers must be adequate to eliminate the injurious effect of subsidisation and their acceptance must not be considered impractical. The Commission assessed the offer in view of these criteria and considered that its acceptance would be impractical for the following overarching reasons.

(776) First, the company produces and sells various product types with significant differences in prices. Aluminium converter foil types cannot be easily distinguished from one another by a physical inspection. In particular, it would be very difficult to assess the thickness only by physical inspection. Without a detailed laboratory analysis the customs authorities would not be able to determine whether the imported product corresponds to what is being declared.

(777) Second, the high number of product types entails a high risk of cross-compensation among the different product types, with more expensive product types possibly being misdeclared as cheaper product types also subject to the undertaking. This renders the undertaking unenforceable and thus impractical within the meaning of Article 13 of the basic Regulation. Third, Zhongji has a high number of related companies directly involved in production or sales of the product under investigation. Furthermore, Zhongji sells the product both directly and indirectly. Such a complex group structure implies a high risk of cross-compensation. The Commission would not be able to monitor and ensure compliance with the undertaking of the indirect sales via the related company in Hong Kong and possibly via the other related companies. This, on its own, would make the offer impractical.

(778) The Commission also assessed the particular commitments of the undertaking offer that Zhongji had put forward to address the principal matters described above. As regards the various product types, the company had offered to export only the products types belonging to five PCNs. In addition, as regards the complex group structure, Zhongji offered to commit to exclusively sell to the Union directly through Zhongji Lamination Materials Co., Ltd, and not to sell any other product to the same customers in the Union to which the product under investigation is sold.

(779) The Commission found that even these particular commitments put forward would not remove the elements making the undertaking offers unenforceable.

(780) Even if Zhongji’s commitment to export only five PCNs would reduce, but not eliminate, the risk of cross-compensation, it would be highly impractical to enforce. The customs authorities would not be able to determine whether the imported product corresponds to what is being declared only by physical inspection, without specific measuring tools.

(781) For the same reason it would be extremely difficult to enforce Zhongji’s commitment not to sell any other product than the product under investigation to the same customers in the EU. Moreover, Zhongji related companies export other aluminium products to the EU, that are also subject to anti-dumping measures and there are measures in force on aluminium products that are classified under the same CN code of the product under investigation (116). Finally, the product concerned itself is also subject to anti-dumping measures in the separate anti-dumping case, and an undertaking offer submitted by the same company in that case has already been rejected.

(782) The Commission sent a letter to the applicant, setting out the above reasons for rejecting the undertaking offer.

(783) The applicant submitted comments thereto. These comments were made available to interested parties on the case file.

(784) Zhongji reiterated its arguments laid down in the undertaking offer and claimed that the particular commitments explained in recital (778) above would be sufficient to make the undertaking offer workable. Also, Zhongji did not consider that distinguishing different product types from one another by a physical inspection would be difficult or that the price adjustment mechanism it had proposed would be complex.

(785) The Commission disagrees. As explained in the recitals (779) to (781), the particular commitments put forward would not remove the fundamental elements making the undertaking offer unenforceable.

(786) Therefore, the Commission considered the undertaking offer unenforceable and thus impractical within the meaning of Article 13 of the basic Regulation, and therefore rejected the offer.

(787) In view of the conclusions reached with regard to subsidisation, injury, causation, and Union interest, and in accordance with Article 15 of the basic Regulation, a definitive countervailing duty should be imposed.

(788) Article 15(1), third subparagraph of the basic Regulation provides that the amount of the definitive countervailing duty shall not exceed the amount of countervailable subsidies established.

(789) Article 15(1), fourth subparagraph states that “where the Commission, on the basis of all the information submitted, can clearly conclude that it is not in the Union’s interest to determine the amount of measures in accordance with the third subparagraph, the amount of the countervailing duty shall be less if such lesser duty would be adequate to remove the injury to the Union industry”.

(790) No such information has been submitted to the Commission, and therefore the level of the countervailing measures will be set with reference to Article 15(1), third subparagraph.

(792) The anti-subsidy investigation was carried out in parallel with a separate anti-dumping investigation concerning the same product concerned originating from the PRC, in which the Commission imposed anti-dumping measures at the level of the injury margin. The Commission made sure that the imposition of a cumulated duty reflecting the level of subsidisation and the full level of dumping would not result in offsetting the effects of subsidisation twice (‘double-counting’) in accordance with Article 24(1) and Article 15(2) of the basic Regulation.

(793) In the separate anti-dumping investigation, the normal value was constructed in accordance with Article 2(6a) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union with reference to undistorted costs and profits in an appropriate external representative country. Consequently, in accordance with Article 15(2) of the basic Regulation and in order to avoid double counting, the Commission first imposed the definitive countervailing duty at the level of the established definitive amount of subsidisation and then imposed the remaining definitive anti-dumping duty, which corresponds to the relevant dumping margin reduced by the amount of the countervailing duty and up to the relevant injury elimination level established in the separate anti-dumping investigation. Since the Commission reduced the dumping margin found with the entire amount of subsidisation established in the PRC, there was no double counting issue within the meaning of Article 24(1) of the basic Regulation. Where the amount resulting from deducting the amount of subsidiation from the dumping margin is higher than the injury margin, the Commission capped the anti-dumping duty at the injury margin. Where the amount resulting from deducting the amount of subsidiation from the dumping margin is lower that the injury margin, the Commission set the level of the anti-dumping duty on the basis of the lower amount.

(794) Given the high rate of cooperation of Chinese exporting producers, the Commission found that the level of the highest duty imposed on the sampled companies would be representative as the ‘all other companies’. The ‘all other companies’ duty will be applied to those companies, which did not cooperate in this investigation.

(795) As mentioned in Recital (594), the total subsidy amount for the cooperating exporting producers not included in the sample was calculated on the basis of the total weighted average amount of countervailing subsidies established for the cooperating exporting producers in the sample with the exclusion of negligible amounts as well as the amount of subsidies established for items, which are subject to the provisions of Article 28(1) of the basic Regulation. However, the Commission did not disregard findings based partially on facts available to determine those amounts. Indeed, the Commission considered that the facts available and used in those cases did not affect substantially the information needed to determine the amount of subsidisation in a fair manner, so that exporters who were not asked to cooperate in the investigation will not be prejudiced by using this approach.

(797) The individual company countervailing duty rate specified in this Regulation was established on the basis of the findings of the present investigation. Therefore, it reflects the situation found during the investigation with respect to the company concerned. This duty rate (as opposed to the countrywide duty applicable to ‘all other companies’) is thus exclusively applicable to imports of products originating in the country concerned and produced by the company mentioned. Imported products produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’.

(798) A company may request the application of these individual duty rates if it changes subsequently the name of its entity. The request must be addressed to the Commission. The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate, which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate, which applies to it, an amending Regulation replacing the previous name with the new name will be adopted and published in the Official Journal of the European Union.

(799) To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual countervailing duties. The companies with individual countervailing duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(4) of this Regulation. Imports not accompanied by that invoice should be subject to the countervailing duty applicable to ‘all other companies’.

(800) While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of countervailing duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this Regulation, the customs authorities of Member States should carry out their usual checks and should, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

(801) Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume after the imposition of the measures concerned, such an increase in volume could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 23(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rate(s) and the consequent imposition of a countrywide duty.

(802) In order to ensure a proper enforcement of the countervailing duty, the duty level for all other companies should not only apply to the non-cooperating exporting producers, but also to those producers, which did not have any exports to the Union during the investigation period.

(803) Following the final disclosure, Xiamen Xiashun as well as Gascogne argued that the General Disclosure would not establish how the Commission would avoid double counting as provided by the basic regulation. Xiamen Xiashun referred to the Commission Regulation in GFF, in which the definitive countervailing duty was established at the level of the established definitive amount of subsidisation while the definitive anti-dumping duty was established at the level of the definitive dumping margin reduced by the definitive countervailing duty where the relevant dumping margin reduced by the countervailing duty is lower than the injury elimination level. Xiamen Xiashun requested the Commission to disclose the method it will apply in calculating the combined duties.

(804) As acknowledged by Xiamen Xiashun, recital (555) of the General Disclosure Document establishes that, should anti-dumping duties be imposed, the Commission would make sure that the imposition of a cumulated duty reflecting the level of subsidisation and the full level of dumping would not result in offsetting the effects of subsidisation twice (“double counting”). As described in recital (793), the Commission followed the same approach that Xiamen Xiashun referred to from the GFF case. This is the standard practice of the Commission in the situation of anti-subsidy and anti-dumping investigations covering the same product. At the time of the final disclosure in this case, no final duties have yet been imposed in the anti-dumping procedure. The Commission could therefore not possibly comment on amending imposed duties, as there were no duties formally in place at the time. However, Xiamen Xiashun and Gascogne had the full possibility of commenting on the avoidance of double counting in reaction to the final disclosure. In any event, parties have a possibility to make comments on potential double counting at this stage. The Commission therefore rejected the claim for a further disclosure.

(805) Following the final disclosure, the consortium of importers and Nanshan requested the Commission to apply the lesser duty rule in Article 15(1) of the Basic Regulation and cap the combined anti-dumping and countervailing duties at the level of the injury margin, noting that there was ample information on file showing that the imposition of countervailing duties on top of the anti-dumping duties would disrupt the Union ACF market.

(806) At the outset, the Commission recalls that the rationale for the rule under Article 15(1), fourth subparagraph of the basic Regulation in anti-subsidy proceedings is detailed in particular at recital (10) of Regulation 2018/825 (117), which sets out that “countervailable subsidies granted by third countries are particularly distortive of trade” and therefore “it is, in general, no longer possible to apply the lesser duty rule.” The default rule in countervailing duty proceedings is that the lesser duty rule does not apply, unless there is evidence that it is clearly in the Union interest to apply it. The standard of evidence to arrive to this conclusion is substantial and should specifically and positively demonstrate that it is in the Union interest to apply a lower level of duty than the amount of subsidisation found.

(807) In the present case, the Commission has addressed all the arguments from the parties regarding Union interest, including those submitted by the consortium of importers and Nanshan, at Section 6 above. The Commission concluded that there are no compelling reasons to conclude that it is not in the Union interest to impose definitive countervailing measures setting the duty at the amount of countervailable subsidies established. The consortium of importers and Nanshan have provided no positive and specific evidence that would allow the Commission to conclude that it is clearly not in the Union interest to set the duty at such level, and instead that it should set it at the lower level capped by the injury margin. Therefore, the standard of evidence required in Article 15(1) fourth subparagraph is not met and the claim by these parties was rejected.

(808) Interested parties were informed on 3 November 2021 of the essential facts and considerations on the basis of which it was intended to recommend the imposition of a definitive countervailing duty on imports of ACF originating in the PRC. Interested parties were given the opportunity to provide comments on the accuracy of the calculations specifically disclosed to them.

(809) Nine parties submitted comments on disclosure. Further, several interested parties had expressed their wish to incorporate the comments submitted in the context of the separate anti-dumping procedure into this anti-subsidy investigation. Upon request, hearings were held with the consortium of importers, Nanshan Group and Wanshun Group. The comments submitted by interested parties were duly considered, and, where appropriate, the findings have been modified accordingly.

(810) In view of Article 109 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (118), 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.

(811) As explained in recitals (788) to (793), the Commission deducted from the dumping margin part of the subsidy amount in order to avoid double counting. Thus, should any modification or removal of the definitive countervailing duties occur, the level of anti-dumping duties should be automatically increased by the same proportion in order to reflect the actual extent of double counting as a result of this modification or removal. This change of the anti-dumping duties should take place as from the entry into force of this regulation.

(812) The measures provided for in this Regulation are in accordance with the opinion of the Committee, established by Article 25(1) 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 (119),

HAS ADOPTED THIS REGULATION:

Article 1

— Aluminium household foil of a thickness of not less than 0,008 mm and not more than 0,018 mm, not backed, not further worked than rolled, in rolls of a width not exceeding 650 mm and of a weight exceeding 10 kg.

— Aluminium household foil of a thickness of not less than 0,007 mm and less than 0,008 mm, regardless of the width of the rolls, whether or not annealed.

— Aluminium household foil of a thickness of not less than 0,008 mm and not more than 0,018 mm and in rolls of a width exceeding 650 mm, whether or not annealed.

— Aluminium household foil of a thickness of more than 0,018 mm and less than 0,021 mm, regardless of the width of the rolls, whether or not annealed.

Article 2

Implementing Regulation (EU) 2021/2170 is amended as follows:

(2) a new Article 1(6) is inserted: ‘6.   Should the definitive countervailing duties imposed by Article 1 of Commission Implementing Regulation (EU) 2021/2170 be modified or removed, the duties specified in paragraph 2 or in Annexes I and II will be increased by the same proportion limited to the actual dumping margin found or the injury margin found as appropriate per company and from the entry into force of this Regulation.’

(3) a new Article 1(7) is inserted: ‘7.   In cases where the countervailing duty has been subtracted from the anti-dumping duty for certain exporting producers, refund requests under Article 21 of Regulation (EU) 2016/1037 shall also trigger the assessment of the dumping margin for that exporting producer prevailing during the refund investigation period.’

(4) the Annex is replaced by Annex I and II.

Article 3

This Regulation shall enter into force on the day following that of 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.

Done at Brussels, 17 December 2021.

For the Commission The President Ursula VON DER LEYEN

(1) OJ L 176, 30.6.2016, p. 55.

(2) OJ C 419, 4.12.2020, p. 32.

(3) The term ‘GOC’ is used in this Regulation in a broad sense, including the State Council, as well as all Ministries, Departments, Agencies, and Administrations at central, regional or local level.

(4) OJ C 352 I, 22.10.2020, p. 1.

(5) Commission Implementing Regulation (EU) 2017/969 of 8 June 2017 imposing definitive countervailing duties on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in the People’s Republic of China and amending Commission Implementing Regulation (EU) 2017/649 imposing a definitive anti-dumping duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in the People’s Republic of China (OJ L 146, 9.6.2017, p. 17) (‘HRF case’), Commission Implementing Regulation (EU) 2018/1690 of 9 November 2018 imposing definitive countervailing duties on imports of certain pneumatic tyres, new or retreaded, of rubber, of a kind used for buses or lorries and with a load index exceeding 121 originating in the People’s Republic of China and amending Commission Implementing Regulation (EU) 2018/1579 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain pneumatic tyres, new or retreaded, of rubber, of a kind used for buses or lorries, with a load index exceeding 121 originating in the People’s Republic of China and repealing Implementing Regulation (EU) 2018/163 (OJ L 283, 12.11.2018, p. 1) (‘Tyres case’) and Commission Implementing Regulation (EU) 2019/72 of 17 January 2019 imposing a definitive countervailing duty on imports of electric bicycles originating in the People’s Republic of China (OJ L 16, 18.1.2019, p. 5) (‘E-bikes case’), Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt (OJ L 189, 15.6.2020, p. 33) (‘GFF case’).

(6) See Panel Report, United States – Countervailing Duty Measures on Certain Products from China, WT/DS437/R, adopted 16 January 2015, para. 7.152.

(7) http://www.gov.cn/xinwen/2019-11/06/5449193/files/26c9d25f713f4ed5b8dc51ae40ef37af.pdf.

(8) Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the purposes of Trade Defence Investigations, 20 December 2017, SWD(2017) 483 final/2 (the ‘China Report’).

(9) See the cases cited in footnote 5 before.

(10) Available at https://trade.ec.europa.eu/tdi/case_details.cfm?id=2501.

(11) Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (2020/C 86/06) OJ C 86, 16.3.2020, p. 6.

(12) Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the purposes of Trade Defence Investigations, 20 December 2017, SWD(2017) 483 final/2 (the ‘Report’) – Chapter 4, p. 41-42, 83.

(13) Report – Chapter 2, p. 17.

(14) Made in China 2025 Roadmap – Chapter 9.

(15) See 10th Five-Year Plan, page 11.

(16) See 11th Five-Year Plan, page 16.

(17) See 12th Five-Year Plan, page 10.

(18) See 13th Five-Year Plan, page 1.

(19) See Decision of the State Council on Promulgating the Interim Provisions Promoting Industrial Structure Adjustment of 2 December 2005, Chapter III Articles 12, 13, 14, and 17.

(20) See Directory Catalogue on Readjustment of Industrial Structure Adjustment (Version 2005), VIII.7.

(21) See Development Planning of Non-ferrous Metals Industry (for 2016 to 2020), p 1. And 34.

(22) See Notice of Guidelines Accelerating the Adjustment of Aluminum Industry Structure, p. 1.

(23) See Notice of Guidelines Accelerating the Adjustment of Aluminum Industry Structure, p. 4.

(24) See Catalogue of high and new technology products (2006).

(25) See US-China Economic and Security Review Commission: The 13th Five-Year Plan, page 12.

(26) https://www.ndrc.gov.cn/fzggw/jgsj/gjss/sjdt/201806/t20180612_1154987.html?code=&state=123, lastaccessed on 21 September 2021.

(27) https://www.cae.cn/cae/html/files/2015-10/29/20151029105822561730637.pdf, last accessed on 28 June 2021.

(28) Notice of the State Council on Promulgating “Made in China 2025” Plan, Sector 9 New materials.

(29) https://www.ndrc.gov.cn/xxgk/zcfb/gg/201702/t20170204_961174.html?code=&state=123, last accessed on 21 September 2021.

(30) Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code (OJ L 343, 29.12.2015, p. 558).

(31) WT/DS379/AB/R (US – Anti-dumping and Countervailing Duties on Certain Products from China), Appellate Body Report of 11 March 2011, DS 379, paragraph 318. See also WT/DS436/AB/R (US – Carbon Steel (India)), Appellate Body Report of 8 December 2014, paragraphs 4.9 – 4.10, 4.17 – 4.20 and WT/DS437/AB/R (United States – Countervailing Duty Measures on Certain Products from China) Appellate Body Report of 18 December 2014, paragraph 4.92.

(32) Decree of the State Council of the People’s Republic of China (No 283).

(33) https://www.reuters.com/article/us-china-banks-party-idUSKBN1JN0XN, last accessed on 13 August 2021.

(34) Official policy document of the China Banking and Insurance Regulatory Commission (“CBIRC”) of 28 August 2020: Three-year action plan for improving corporate governance of the banking and insurance sectors (2020-2022). http://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=925393&itemId=928 (last viewed on 3 April 2021)

(35) China Banking and Insurance Regulatory Commission (cbirc.gov.cn), last accessed 21 October 2021

(36) According to the Implementing Measures of the CBIRC for Administrative Licensing Matters for Chinese-funded Commercial Banks (Order of the CBIRC [2017] No 1), the Implementing Measures of the CBIRC for Administrative Licensing Matters relating to Foreign-funded Banks (Order of the CBIRC [2015] No 4) and the Administrative Measures for the Qualifications of Directors and Senior Officers of Financial Institutions in the Banking Sector (CBIRC [2013] No 3).

(37) Article 13 of the Notice on the Supervision regulations concerning the behaviour of large shareholders of bank and insurance institutions (CBIRC, [2021] No 43)

(38) See CBIRC’s Notice on the Commercial banks performance evaluation method, issued on 15 December 2020. http://jrs.mof.gov.cn/ gongzuotongzhi/202101/t20210104_3638904.htm (last viewed on 12 April 2021)

(39) http://www.pbc.gov.cn/zhengcehuobisi/125207/125213/125440/3876551/de24575c/index2.html, last accessed on 3 August 2021.

(40) See http://english.eximbank.gov.cn/Profile/AboutTB/Introduction/ as last checked on 30 November 2021.

(41) See http://english.eximbank.gov.cn/Profile/Organization/BoardOD/#heightXwyL as last checked on 30 November 2021.

(42) See http://english.eximbank.gov.cn/Profile/Organization/BoardOS/#heightXwyL as last checked on 30 November 2021, also confirming that the board of supervisors reports directly to the State Council.

(43) See http://english.eximbank.gov.cn/Profile/Organization/ExecutiveM/#heightXwyL as last checked on 30 November 2021.

(44) See the cases cited in footnote 5 before.

(45) See the cases cited in footnote 5 before.

(46) WT/DS/296 (DS296 United States – Countervailing duty investigation on Dynamic Random Access Memory (DRAMS) from Korea), Appellate Body Report of 21 February 2005, para. 116.

(47) Appellate Body Report, DS 296, para. 116.

(48) Appellate Body Report, DS 296, para. 115.

(49) Appellate Body Report, DS 296, para. 114 agreeing with the Panel Report, DS 194, para. 8.31. on that account.

(50) Appellate Body Report, DS 296, para. 115.

(51) http://www.pbc.gov.cn/zhengcehuobisi/125207/125213/125440/3876551/de24575c/index2.html, last accessed on 3 August 2021.

(52) IMF Working Paper ‘Resolving China’s Corporate Debt Problem’, by Wojciech Maliszewski, Serkan Arslanalp, John Caparusso, José Garrido, Si Guo, Joong Shik Kang, W. Raphael Lam, T. Daniel Law, Wei Liao, Nadia Rendak, Philippe Wingender, Jiangyan, October 2016, WP/16/203.

(53) Livingston, M. Poon, W.P.H. and Zhou, L. (2017). Are Chinese Credit Ratings Relevant? A Study of the Chinese Bond Market and Credit Rating Industry, in: Journal of Banking & Finance, p. 24.

(54) China bond market insight 2021, https://assets.bbhub.io/professional/sites/10/China-bond-market-booklet.pdf, last accessed on 8 August 2021.

(55) China bond market insight 2021, Footnote 59, p. 31.

(56) Price, A.H., Brightbill T.C., DeFrancesco R.E., Claeys, S.J., Teslik, A. and Neelakantan, U. (2017). China’s broken promises: why it is not a market-economy, Wiley Rein LLP, p. 68.

(57) Lin, L.W. and Milhaupt, C.J. (2016). Bonded to the State: A network Perspective on China’s Corporate Debt Market, Columbia Law and Economics Working Paper No 543, p. 20; Livingstone, ibid, p. 9

(58) See Tentative Measures for the Administration of the Credit Rating Business Regarding the Securities Market Promulgated by Chinese Securities Regulatory Commission, Order of the China Securities Regulatory Commission [2007] No 50, 24 August 2007; Notice of the People’s Bank of China on Qualifications of China Cheng Xin Securities Rating Co., Ltd. and other Institutions Engaged in Corporate Bond Credit Rating Business, Yinfa [1997] No 547, 16 December 1997, and Announcement No 14 [2018] of the People’s Bank of China and the China Securities Regulatory Commission on Issues Concerning the Provision of Bond Rating Services by Credit Rating Agencies on the Interbank Bond Market and the Stock Exchange Bond Market.

(59) PBOC Working Paper No 2017/5, May 25, 2017, p. 28.

(60) Working_Paper (pbc.gov.cn) (last accessed 28 November 2021)

(61) Article X, point II of the CBRC’s Guidelines on risk-based loan classification.

(62) See HRF case (recitals 152 to 244), Tyres case (recital 236) and GFF case (recital 300) cited in footnote 5.

(63) See HRF case (recitals 152 to 244), Tyres case (recital 236) and GFF case (recital 300) cited in footnote 5.

(64) See HRF case (recitals 152 to 244), Tyres case (recital 236) and GFF case (recital 300) cited in footnote 5.

(65) See recital (177) above.

(66) In case of fixed interest loans. For variable interest rate loans, the PBOC benchmark rate during the IP was taken.

(67) HRF and Tyres cases, recitals (175) to (187) in the HRF case, and from recital (256) in the Tyres case

(68) The company is continuing its business for the foreseeable future.

(69) “Promoting LPR Reform Orderly”, issued by the Monetary Policy Analysis Group of the People’s Bank of China, September 15, 2020, http://www.pbc.gov.cn/en/3688110/3688172/4048269/4094018/2020091518070233600.pdf, last accessed 30 November 2021.

(70) See https://www.barclays.co.uk/current-accounts/bank-account/overdrafts/overdraft-charges/, last accessed on 18 August 2021, fees for executive overdrafts – “overdrafts over GBP 15 000 have a set-up fee of 1,5 % of the arranged overdraft limit, and a renewal fee of 1,5 %”.

(71) See GFF case cited in footnote 5 (recitals 354 and 355)

(72) GDD, footnote 55

(73) GDD, footnote 55.

(74) See website of the People’s Bank of China:

https://www.boc.cn/en/cbservice/cncb6/cb61/200811/t20081112_1324239.html, last accessed on 18 August 2021.

(75) Ibid.

(76) See website of DBS Bank: https://www.dbs.com.cn/corporate/financing/working-capital/bank-acceptance-draft-bad-issuance, last accessed on 18 August 2021.

(77) For a more specific description of the way in which bank acceptance drafts are generally used, see GFF case referenced in footnote 5 above, recitals 359 to 370

(78) See GFF case mentioned in footnote 5, recital 385.

(79) See E-bikes case, recital 316, and GFF case, recital 407, both cited in footnote 5.

(80) See GFF case mentioned in footnote 5, recital 399.

(81) Lastly amended on 28 December 2019 by Presidential Decree No 37 with effect from 1 March 2020.

(82) Lastly amended on 14 February 2020 pursuant to the Decision on Revision of the "Administrative Measures on Securities Issuance by Listed Companies" of the China Securities Regulatory Commission with effect from 14 February 2020.

(83) Replaced by Administrative Measures on the Sponsor Service for Securities Issuances and Listings, Decree No 170 of the China Securities Regulatory Commission of 12 June 2020 with effect from 12 June 2020.

(84) See China bond market insight 2021, Footnote 59, p. 33.

(85) See China bond market insight 2021, Footnote 59, p. 33.

(86) As there were no data specific to convertible corporate bonds publicly available, the Commission used the data available for corporate bonds, which should also include convertible corporate bonds.

(87) See recital (177) above.

(88) OECD Study on Chinese export credit policies and programmes, page 7, para 32, available at https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=TAD/ECG(2015)3&doclanguage=en, last accessed on 18 August 2021.

(89) See Sinosure website, Company profile, Supporting ‘Made in China’, https://www.sinosure.com.cn/en/Resbonsiblity/smic/index.shtml, last accessed on 17 August 2021.

(90) See Tyres case cited in footnote 5, recital 429.

(91) https://www.sinosure.com.cn/en/Sinosure/Profile/index.shtml, last accessed on 18 August 2021.

(92) China’s High-tech Products Export Catalogue, No 417.

(93) http://www.mofcom.gov.cn/aarticle/b/g/200411/20041100300040.html, last accessed on 12 August 2021.

(94) Sinosure Annual Report 2019, p. 11, https://www.sinosure.com.cn/images/xwzx/ndbd/2020/08/27/38BBA5826A689D7D5B1DAE8BB66FACF8.pdf, last accessed on 18 August 2019.

(95) Ibid, p. 38.

(96) OJ C 394, 17.12.1998, p. 6.

(97) Such as e.g. Council Implementing Regulation (EU) No 452/2011, OJ L 128, 14.5.2011, p. 18 (Coated fine paper), Council Implementing Regulation (EU) No 2013/215, OJ L 73, 11.3.2013, p. 16 (Organic coated steel), Commission Implementing Regulation (EU) 2017/366, OJ L 56, 3.3.2017, p. 1, (Solar panels), Commission Implementing Regulation (EU) No 1379/2014, OJ L 367, 23.12.2014, p. 22. (Filament glass fibre), Commission Implementing Decision 2014/918, OJ L 360, 16.12.2014, p. 65 (Polyester Staple Fibers).

(98) http://www.npc.gov.cn/zgrdw/englishnpc/Law/2009-02/20/content_1471133.htm

(99) Implementing Regulations of the Enterprise Income Tax Law of the People’s Republic of China (Revised in 2019) – Order of the State Council of the People’s Republic of China No 714.

(100) http://kj.quanzhou.gov.cn/wsbs/xgxz/201703/t20170322_431820.htm, last accessed on 17 August 2021.

(101) Announcement [2021] No 13 of the Ministry of Finance and the State Taxation Administration on Further Improvements to the Policy of Weighted Pre-tax Deduction for Research and Development Expenses.

(102) See HRF, Tyres and GFF cases cited in footnote 5, recitals 330, 521 and 560 respectively.

(103) See section 3.1 above.

(104) See GFF, OCS, and Solar panels cases.

(105) Upheld by the General Court in Case T-444/11 Gold East Paper and Gold Huacheng Paper versus Council, Judgment of the General Court of 11 September 2014 ECLI:EU:T:2014:773.

(106) See GFF, OCS, and Solar panels cases.

(107) https://idbpark.moeaidb.gov.tw/, last accessed on 18 August 2021.

(108) Jiangyin - Wikipedia

(109) Xiamen - Wikipedia

(110) Several Opinions of the Central Committee of the Communist Party of China and the State Council on Further Deepening the Reform of the Power System (Zhong Fa [2015] No 9), Section III (4).

(111) Commission Implementing Regulation (EU) 2021/983 of 17 June 2021, imposing a provisional anti-dumping duty on imports of aluminium converter foil originating in the People’s Republic of China, OJ L 216/142, 18 June 2021, recital 382.

(112) Appellate Body Report, US – Softwood Lumber IV, paras. 142-143.

(113) Appellate Body Report, United States – Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea (WT/DS464/AB/R), 7 September 2016, para. 5.298.

(114) See also, mutatis mutandis, WT/DS294/AB/RW, US – Zeroing (Article 21.5 DSU), Appellate Body Report of 14 May 2009, para 453.

(115) TARIC codes 7607111960 and 7607111993 (which was numbered 7607111995 until 17 February 2017).

(116) Commission Implementing Regulation (EU) 2015/2384 of 17 December 2015 imposing a definitive anti-dumping duty on imports of certain aluminium foils originating in the People’s Republic of China and terminating the proceeding for imports of certain aluminium foils originating in Brazil following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 1225/2009.

(117) OJ L 143, 7.6.2018, p. 1.

(118) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).