31990R3798

28 . 12 . 90 Official Journal of the European Communities No L 365/25

COMMISSION REGULATION (EEC) No 3798/90 of 21 December 1990 imposing a provisional anti-dumping duty on imports of espadrilles originating in the People's Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES, views in writing and requested a hearing, which the Commission granted. Having regard to the Treaty establishing the European Economic Community, I The complaint indicated that there might be small­ scale production of beach slippers in Greece. Follo­ Having regard to Council Regulation (EEC) No 2423/88 wing discussions with the Hellenic Association of of 11 July 1988 on protection against dumped or subsi­ Footwear Manufacturers and Exporters, a question­ dized imports from countries not members of the Euro­ naire was sent to a Greek producer but no reply pean Economic Community, (') and in particular Article was received by the Commission from that 1 1 thereof, producer nor from any other Greek producer. The view was accordingly taken that it was not possible After consultations within the Advisory Committee as to confirm the existence of any Greek production provided for by the abovementioned Regulation, of the product in question.

Whereas : (4) Three Chinese exporters (the Zhejiang Arts and Crafts Import and Export Corporation, the Fujian Footwear and Headgear Corporation and the A. PROCEDURE Shanghai Arts and Crafts Import and Export Corporation) replied to the questionnaires within the time prescribed. In addition, the principal orga­ nization in the People's Republic of China with (1 ) In July 1989 a complaint was lodged in writing responsibility for trade in footwear, the China with the Commission by the French National Chamber of Commerce for Import and Export of , Footwear Industry Federation, the Spanish Foot­ Light Industrial Products and Arts-Crafts, here­ wear Industry Federation and Etchandy Portugal inafter referred to as the 'Chinese Chamber of (the sole Portuguese producer) on behalf of produ­ Commerce', made known in writing the views of cers accounting for the bulk of Community Chinese exporters taken as a whole. That organiza­ production of espadrilles (beach slippers). tion likewise sought a hearing and this was granted by the Commission. The complaint contained evidence of dumping and resultant injury which was considered sufficient to It became apparent in the course of the investiga­ warrant the initiation of a proceeding. tion that the three Chinese exporters which coope­ rated accounted for approximately one quarter of The Commission accordingly announced, in a the exports of beach slippers from the People's notice published in the Official Journal of the Republic of China to the Community and that no European Communities, (2) the initiation of an information was available regarding exports by anti-dumping proceeding concerning imports into other Chinese exporters. the Community of beach slippers falling within CN codes ex 6404 19 90 or 6405 20 99, originating in the People's Republic of China, Since the People's Republic of China is not a market economy country within the meaning of (2) The Commission officially notified the exporters Article 2 (5) of Regulation (EEC) No 2423/88 and and importers known to be concerned, the repre­ since the comments made by the Chinese exporters sentatives of the exporting country and the were submitted en bloc and not all the Chinese complainants. exporters were identified, the Commission took the view that, for the purposes of the proceeding, all It requested the parties concerned to reply to the the Chinese exports should be taken into account questionnaires which had been sent to them and collectively. gave them the opportunity to make known their views in writing and to request a hearing. (5) The Commission sent questionnaires to the eighty importers listed in the complaint. It became clear (3) Most of the complainant Community producers that, firstly, eight of them had not imported beach replied to the questionnaires, made known their slippers from the People's Republic of China, at least not during the reference period, and, secondly, (') OJ No L 209 , 2. 8 . 1988, p. 1 . eight others had changed their address and could (2) OJ No C 314, 14. 12. 1989, p. 15. not be contacted .

No L 365/26 Official Journal of the European Communities 28 . 12. 90

In addition, five importers, of which the Commis­ selected because most of the producers and a sion was not aware when the proceeding number of the Community importers were small commenced, made themselves known to the firms. The Commission accordingly considered Commission within the period specified in the that it was reasonable that the reference period notice of initiation. should coincide with the last full accounting year, since the finalized and audited results for that year Of the sixty-nine importers thus contacted and were the most recent available when the companies who could have cooperated, only two sent the concerned were required to complete the question­ naires . Commission complete replies to the questionnaires within the periods stipulated or granted.

Lastly, three importers' associations made their B. THE PRODUCT IN QUESTION, LIKE views known in writing and requested and were PRODUCTS AND THE COMMUNITY granted hearings. INDUSTRY (6) As a result, in the case of those parties which failed to reply or which failed to make representations in (a) product in question any other way, findings were made, pursuant to Article 7 (7) (b) of Regulation (EEC) No 2423/88, (9) The products which are the subject of the notice on the basis of the facts available, that is to say, in initiating the proceeding are beach slippers with this case, the information obtained from the plaited fibre soles, whether or not strengthened complainant and the official statistics of the with rubber or plastics over a variable surface, Community. falling within CN codes ex 6404 19 90 or ex 6405 20 99 . (7) The Commission sought and verified all the infor­ mation it considered necessary for a preliminary Beach slippers are classified within one or other of determination of dumping and resultant injury as those two CN codes according to the respective regards those parties which agreed to cooperate. To percentage of rope or rubber (or plastics) which that end, it carried out on-the-spot checks at the constitutes the surface of the outer sole in contact premises of the following : with the ground :

— up to 50 % rubber (or plastics) ; in this case the (a) Community producers slippers fall within CN code ex 6405 20 99, hereinafter referred to as 'Type A' ; — Berasategui, Hendaye, France — more than 50 % and up to 100 % rubber (or — Ets Callian, St Paul les Dax, France plastics) ; in this c?se the slippers fall within CN code ex 6404 19 90, hereinafter referred to — Ets Causseque, Monte-de-Marsan, France as 'Type B\ — Ets Etchandy, Mauleon, Frane — Manufacture Luzienne, Urrugne, France (10) The investigation showed that these two CN codes, the purpose of which is to enable a distinction to — Pee Laborde, Aramits, France be made when applying the customs tariff on the — Ets Tauzin, Mauleon, France basis of the criterion indicated above, corresponded, — Calzados Puerta SA, Arnedo, Spain in fact, to basically three types of slipper : — Dosega SA, Arnedo, Spain — those with a sole coated at three points, all — Etchandy Portugal, Covilha, Portugal (since the belonging to Type A, accounting documents relating to this producer — those with a 'grid' sole, which can be either had been transferred, for the purposes of the Type A or Type B, investigation, to the registered office of its — those with a fully coated sole, which all belong parent company in France, the relevant checks to Type B. were carried out at the same time as those that were carried out at the premises of the French The investigation covered beach slippers of these producer in question, Ets Etchandy, Mauleon). three types with a sole of uniform thickness not exceeding 2,5 cm. (b) Community importers In so far as all these products have the same basic physical or technical characteristics and are used — Netter et Cie, Paris, France for the same purpose, the Commission took the — Moritz L. Chrambach GmbH & Co . Hamburg, view that all beach slippers constituted the product Germany in question in this Regulation, irrespective of the amount of coating on the sole, on condition that (8) The dumping investigation covered the period 1 the sole was of uniform thickness not exceeding 2,5 January to 31 December 1988 . This period was cm .

28 . 12. 90 Official Journal of the European Communities No L 365/27

C. DUMPING (b) Like products

( 11 ) With regard to the definition of like products, the Commission established that there were no signifi­ (a) Normal value cant physical differences between the slippers exported to the Community by the Chinese expor­ ters and the corresponding products sold by (13) In order to establish that imports of beach slippers Community producers. originating in the People's Republic of China were being dumped, the Commission was obliged to take into account the fact that China is not a In this regard, the argument put by the China market economy country and, accordingly, to base Chamber of Commerce and by the Community its calculations on the normal value of the product importers' associations, that the beach slippers in question in a market economy country. To that produced in China were not comparable from the end, the complainant had proposed a price which standpoint of quality to those manufactured in the corresponded to an offer from a producer in Community could not be accepted. Uruguay.

The Commission found that the differences That proposal had been regarded a£ acceptable in the context of the complaint and in order to claimed (essentially the quality of the fabric of the initiate the investigation but the said reference to upper and the quality of the fibre used to manufac­ ture the sole), firstly, were not discernible in every an offer could not be regarded as adequate for the case and, secondly, where they could be discerned, purposes of establishing the normal value. were so minimal as not to affect the basic characte­ ristics of the product or the purpose for which it is intended . (14) The Commission accordingly carried out a survey of the various third country producers of beach slippers that might provide a suitable reference and found that : In addition, the Commission was able to confirm that the Chinese beach slippers were sold on an — there had been some very small-scale produc­ entirely competitive basis with Community slip­ tion in Tunisia and in Israel, although no pers, as witnessed by the fact that in the majority of evidence was available as to whether it was selling outlets Chinese products and Community continuing ; products are sold together. — production had recently commenced in Bangla­ desh but it appeared to be too recent to provide On these bases, the Commission took the view a suitable reference for the purposes of this that, firstly, beach slippers produced in the investigation ; Community, taken as a whole, and, secondly, beach — there had been sizeable production of beach slippers exported from the People's Republic of China to the Community, taken as a whole, are like slippers in South America for almost a century. products within the meaning of Article 2 (12) of They were produced by SA Fabrica Uruguaya Regulation (EEC) No 2423/88 . de Alpargatas, Montevideo, Uruguay and Indus­ tria Chilena de Alpargatas SA ('Inchal'), Santiago, Chile, which had agreed to cooperate with the Commission . A second Chilean producer had stated that it was unable to coope­ rate on practical grounds. (c) Community industry

(15) The Commission carried out investigations at the ( 12) The Commission found that the producers on premises of the two abovementioned South whose behalf the complaint was lodged, which American producers and found that : cooperated with the Commission and which manu­ factured beach slippers during the investigation — the Uruguayan producer was a fully integrated period, accounted for the bulk of Community company, i.e. it manufactured the braid for the production of like products during that period. soles and the cotton fabric for the uppers itself, produced approximately 1,4 million pairs of beach slippers a year but did not vulcanize the As a result, the Commission took the view that soles (unlike the Chinese and Community they constitute the Community industry within the producers). This producer's manufacturing meaning of Article 4 (5) of Regulation (EEC) No process was efficient, modem and cost effec­ 2423/88 . tive :

No L 365/28 28 . 12 . 90 Official Journal of the European Communities

— the Chilean producer which had agreed to (18) The Commission took the view that the profit cooperate with the Commission was a recently­ margin had to be sufficient to ensure a minimum established company and its production had return on sales at different marketing stages, inclu­ not yet attained a level that enabled it to ding sales to wholesalers. The Commission took the view that a minimum return must mean a level operate under economically optimum condi­ tions. As a result, its costs and prices were of profit which : higher than those of the Uruguyan producer. On the other hand, it possessed efficient plant — enabled the producer in question to make such with which it vulcanized the soles. investments as were essential to maintaining its plant at the high level of technical efficiency which they had already attained at the time of The Commission accordingly took the view that it the on-the-spot investigation ; was reasonable to establish the normal value on the basis of the information obtained and verified at — ensured an acceptable return on the capital the premises of the Uruguayan producer and to invested . make a suitable adjustment to take account of the cost of vulcanization . Under those conditions, the profit margin was esta­ blished at 7 % of the constructed normal value. ( 16) In establishing the normal value in Uruguay, the Commission took account of the fact that on the (19) With regard to quality, the Commission found that market of Uruguay imported beach slippers are subject to a system of 'reference prices' which are the beach slippers manufactured in Uruguay were generally stronger than the Chinese like product intended to protect the local industry from cheap imports. but, on the other hand, they were not always as elaborate (lack of inner soles, lack of embroidery, that were usually to be found in the case of the In so far as that system might influence the articles imported from China). In these circum­ stances the view was take that there was a balance domestic selling prices of the Uruguayan producer and since its exports to both North and South between the value attaching to the said characteris­ America were negligible compared with its total tics and that, therefore, no upward or downward production, it appeared necessary to calculate the adjustment was warranted on account of differences normal value on the basis of the constructed value in quality. of the like product in Uruguay. The constructed value was determined by adding the cost of produc­ (20) The costs of vulcanization were calculated from the tion of the beach slippers and a reasonable margin of profit. information obtained during the investigation carried out at the premises of the Community producers and in the course of the investigation The cost of production was calculated by adding carried out in Chile. It appeared that the costs of together all costs, both fixed and variable, relating the Chilean producer were the lowest. Therefore, to : the costs of that producer, limited to the cost of materials and production costs, established on the — materials, basis of a weighted average for the 'Type A' and 'Type B' beach slippers, plus the same 7 % profit — manufacture, in the country of origin, of medi­ margin, were added to the constructed value esta­ um-sized beach slippers (corresponding to blished in Uruguay. ladies' sizes, which generally constitute most of the trade). (21 ) The representatives of the China Chamber of Commerce and the importers' associations objected To those costs were added selling and administra­ to the choice of reference country on the ground tive expenses and other overheads, which were that the beach slippers originating in Uruguay were determined by reference to the sales of beach slip­ not exported to the Community. They suggested pers made by the Uruguayan producer on its that Bangladesh should be used as the reference domestic market during the investigation period. country and, to that end, proposed that the normal Those costs, unlike the profit margin, could not be value be based on an offer and a purchase from influenced by the system of reference prices in that country, which took place in 1990. force in Uruguay in regard to imported products.

The Commission considers that the argument put ( 17) For all calculations, the effects of inflation in forward is not valid since the normal value must be Uruguay were neutralized by the system used by as close as possible to prices prevailing in the the company which consisted of drawing up reference country. Therefore, the fact that Uruguay accounts using 'ajustes para inflation operativa' did not export beach slippers to the Community is fixed by the Uruguayan authorities. irrelevant.

28 . 12 . 90 No L 365/29 Official Journal of the European Communities

D. COMPARISON With regard to Bangladesh, as stated at point 14 above, according to the information obtained by the Commission, its production is too recent to constitute a suitable reference within the context of (24) In its comparison of normal value and export this investigation . prices, the Commission took account, in accor­ dance with Article 2 "(9) and (10) of Regulation (EEC) No 2423/88, of differences affecting price (22) As a result, the Commission concluded that it was comparability. appropriate and reasonable to establish the normal value on the basis of the constructed value in The comparison was made at the ex-works stage on Uruguay, adjusted so as to take account of all the an overall basis for the whole of the reference differences affecting price comparability and parti­ period. The necessary adjustments were made : cularly with regard to the physical characteristics, adding the costs involved in vulcanizing the soles. — in the case of the normal value, on the basis of the data obtained in the course of the investiga­ tion in Uruguay relating, inter alia, to inland transport, the costs of insurance, handling and packaging, financing costs and selling (b) Export prices expenses ;

— in the case of the export prices, and in the absence of data from the Chinese exporters, on (23) Export prices were established on the basis of the the basis of the data available relating, inter prices actually paid or payable for products alia, to freight rates, insurance, handling, exported to the Community. inland transport and packaging costs, financing costs and selling expenses.

In this regard, the Commission established that the prices indicated by the two importers which coope­ rated in the investigation could not be regarded, on their own, as significant because of the small quan­ E. DUMPING MARGIN tities involved (only about 3 % of total imports).

(25) The preliminary examination of the facts shows The Commission accordingly considered that, in that exports of beach slippers effected by the order to determine the export prices of the beach Chinese exporters are being dumped. The dumping slippers, it was appropriate to calculate a weighted margin is equal to the difference between the average of the prices payable as stated by the normal value established for medium-sized beach Chinese exporters (which made no distinction slippers and the price on export to the Community, between the 'Type A' and the Type B' slippers) and and amounts, on a weighted average basis, to the prices paid as indicated by the importers which 93,3 % of the free at frontier value at the Commu­ cooperated in the investigation. nity frontier of imports of the product in question originating in the People's Republic of China, for the Chinese exporters taken as a whole. Although the volume of beach slippers thus taken into account represents only about 30 % of total imports, the said data was preferred to the figures shown in the official statistics of the Community in so far as the latter combine the data relating to F. INJURY beach slippers with that relating to other footwear which cannot be regarded as like products. (a) Volume and price of imports

In addition, the Commission took the view that establishing a weighted average that was valid for (i) Volume of dumped imports both types of beach slipper was a suitable and reasonable method since most of the available data (26) As indicated above (at points 9 and 23) there is no made no distinction between 'Type A' and 'Type B' specific CN code for beach slippers (hence the 'ex' slippers. As far as sizes were concerned, the headings). Eurostats therefore aggregate beach slip­ invoices examined at the premises of the importers pers with other footwear and the resultant data which cooperated showed that most of the trade must be qualified. With the assistance of the was in medium-sized slippers and that the said data Member States, these statistics were rectified and it was, accordingly, compatible with that obtained in was possible to bring them more in line with the order to establish the normal value . actual level of beach slipper imports. In addition,

No L 365 / 30 28 . 12 . 90 Official Journal of the European Communities

the China Chamber of Commerce communicated other third countries, were imported into the to the Commission the Chinese export statistics Community between 1985 and 1988 . with which it was possible to confirm, at least in part, the rectifications made. According to the information obtained by the Commission, the quantities in question do not generally relate to sales of beach slippers but (27) On the basis of the raw data shown in the Euros­ mainly to supplies of other footwear (for example, tats, imports originating in the People's Republic of China more than doubled between 1985 and 1988 slippers with rubber soles). (rising from 29,25 million pairs in 1985 to 35,98 million pairs in 1986, 69,21 million pairs in 1987 On this basis China can be considered as by far the and 68,83 million pairs in 1988). major if not strictly speaking the solethird country supplying beach slippers to the Community. The Commission therefore felt that other third coun­ The rectified Eurostats figures, which are available tries were responsible for such small quantities (as for 1986, 1987 and 1988 only, also show that can be seen from French statistics which draw a imports from China increased substantially, but distinction between 'beach slippers' and 'other foot­ slightly less so, from 28,56 million pairs in 1986 to wear') that they can be disregarded. 59,27 million pairs in 1987 and 56,34 million pairs in 1988 . The Commission therefore considered that a rea­ sonable basis for calculating total sales of the The latter figures are partially confirmed by the product in question on the Community market was Chinese export statistics which show that Chinese to add up Chinese imports and Community produ­ cers' sales . deliveries rose from 21,89 million pairs in 1985 to 28,19 million pairs in 1986, 54,30 million pairs in 1987 and 36,85 million pairs in 1988 . (iii) Market share of dumped imports

The only significant discrepancy between the (29) On the basis indicated in the above paragraph, it Chinese statistics and the rectified Eurostats figures transpires that the Chinese exporters' market share relates to 1987 and 1988 . The reason for this may has risen substantially, from 64 % in 1985 to 84 % lie in the interval between the shipments (in 1987) in 1988 . and the collection of data relating to imports into the Community (in 1988). However, this discre­ pancy does not call in question the general trend This increase of over 30 % in the Chinese expor­ brought to light. ters' market share between 1985 and 1988 must also be looked at in the light of the increase of over 50 % in Community consumption in the same The Commission therefore considers that a reaso­ period. nable estimate of the increase in volume of imports of beach slippers originating in the People's Repu­ blic of China is as follows : (IV) Prices

— for the period 1985-88 : approximately 70 % (30) During the investigation it became clear that a (on the basis of the statistics supplied by the distinction should be drawn between two types of Chinese Chamber of Commerce) ; beach slippers, sold on the Community market at very different prices : — for the period 1986-88 : approximately 65 % (midway between the percentage resulting from (a) the traditional or standard beach slipper (with the export figures of the People's Republic of an upper made of plain canvas or with simple China and that resulting from the rectified woven or printed decorations such as coloured Eurostats figures). patterns or stripes), accounting for over 90 % of Community production and an even higher In both cases the rate of increase is substantial. percentage of Community consumption ;

(b) a more elaborate product, hereafter called 'fancy beach slippers' (with an upper made of a special (ii) Volume of imports originating in other third weave and/or made of a more special fabric countries than cotton canvas, which may also have deco­ rations such as laces, elastic or inset or embroi­ dered patterns) accounting for less than 10 % of (28) Eurostats indicated that products falling within CN Community production and an even smaller codes 6404 1 9 90 and 6405 20 99, originating in percentage of Community consumption.

28 . 12. 90 Official Journal of the European Communities No L 365/31

Although the Chinese exporters representatives Community producers it emerged, however, that admitted that they also supplied the Community capacities could be reasonably established. market with fancy beach slippers, they said that the market share was minimal (which did not justify (35) Overall, Community producers still in business at their being taken into account in calculating the the time of the investigation, slightly increased margin of dumping, besides which the Chinese their production capacity between 1985 and 1988, exporters had provided no precise information because of improvements in installations or, in a about them). The Commission therefore decided few cases, because of purchasing machines from that for price comparison purposes, sales of fancy other Community producers who had shut down. beach slippers by Community producers should be disregarded. Calculated on the basis of the capacity actually available each year from 1985-88 , Community (31 ) During the period 1985 to 1988 Chinese exporters producers' rate of capacity utilization fell steadily taken overall reduced their selling prices by about between 1985 and 1988 , from 71 % in 1985 to 35 % . 64 % in 1986, 67 % in 1987 and 43 % in 1988 .

(32) To calculate the differences in selling prices in the Community between beach slippers from China (iii) Stocks and those produced in the Community, the Commission compared the average price of (36) As beach slippers are seasonal products, generally products imported from China (free at Community sold to wholesalers and retailers at the beginning of frontier, cleared through customs) and the weighted the year, the Commission saw nothing unusual in average price of standard beach slippers sold to stocks being generally high at the end of each wholesalers by Community producers. This method accounting year and felt that the size of these was deemed appropriate as Chinese exporters sell stocks should therefore not be taken into conside­ to importers who act as wholesalers on the market. ration .

This comparison showed that the Community producers had been unable to follow the prices set (iv) Sales by the Chinese exporters since price undercutting during the reference period had reached 181 % . (37) Community producers' sales on the Community market were as follows : using the index 1985 = 100 as a basis, sales went from 98 in 1986 to 105 in 1987 and 72 in 1988 . This trend (a fall of 28 % (b) Other economic factors to be considered between 1985 and 1988) concerns only those manufacturers still in business at the time of the investigation. The overall loss would therefore be both greater and steadier (40 % between 1985 and (i) Production 1988) if the sales of producers who went out of business during the period 1985-88 were also taken into consideration . (33) The Commission found that Community produc­ tion of beach slippers had developed as follows : using the index 1985 = 100 as a basis, production (v) Market share reached 94 in 1986, 103 in 1987 and 67 in 1988 . These figures, based solely on the production figures of those beach slipper manufacturers still in (38) Calculated on the same basis as for China, business at the time of the investigation, reveal : Community producers' market share fell from 36 % to 29 % in 1986, 17 % in 1987 and 16 % — a temporary improvement in production in during the reference period, while the volume of 1987, owing to an increase in demand, followed transactions in the Community rose between 1984 and 1988 . by a major drop in 1988 ; — a drop of about 30 % between 1985 and 1988 . (vi) Prices

(ii) Capacity utilization (39) Having seen their market share fall steadily between 1985 and 1988, Community producers (34) The complaint indicated that the concept of gave up trying to match the prices charged by the production capacity could not be applied to the Chinese exporters in order to avoid suffering irre­ sector in question. During on-the-spot checks of versible financial losses.

No L 365/32 Official Journal of the European Communities 28 . 12. 90

They did, however, try to make standard beach slip­ G. CAUSAL LINK BETWEEN THE INJURY AND THE DUMPED IMPORTS pers more attractive (for example by developing new fabrics). As a result of these efforts, they managed to maintain or slightly increase their prices during the period 1985-88 .

(40) Using the index 1985 = 100 as a basis, the price of (45) The Commission examined the extent to which the standard beach slippers was 106 in 1986, 102 in injury to the Community industry had been caused 1987 and 106 in 1988 . This increase was very by the effects of dumping. It emerged that the drop moderate considering the rise in the price of raw in the Community industry's market shares and materials during the same period. profit margins had coincided with the increase in the volume of imports of beach slippers from China. Since prices are an important factor in sales of these products, the considerable price undercut­ (vii) Profits ting by the Chinese products had a direct effect on the Community industry's volume of sales.

(41 ) The Commission found that the financial results achieved by Community industry, which overall showed a very slight profit between 1985 and 1987, (46) with regard to the closures referred to at point 42, had seriously deteriorated in 1988, a year in which the Commission considers that shut-downs which the sector suffered losses . These losses were caused took place between 1985 and 1988 are not strictly by the major drop in sales sustained during the speaking linked with the market situation created reference period. by imports of Chinese beach slippers. Although information available is incomplete it appears that an equally significant factor in the closures was the restructuring and modernization of the sector in (viii) Activity and employment the 1980s.

(42) The complaint referred to the closure of several firms and claimed that these shut-downs were a The Commission is, however, of the opinion that source of injury. the job losses incurred by producers who remained in business were due, at least partially, to the drop in their sales, which itself can be attributed to (43) With regard to the employment situation of produ­ massive imports of Chinese beach slippers sold at cers still in business at the time of the investiga­ dumped prices. tion, the Commission found that the staff they employed had been cut by over 20 % during the period 1985-88, and they had also been obliged to (47) Only the Chinese exporters gained by the increase introduce occasional short-time working. in consumption seen in the Community from 1985 to 1988 because of the prices at which they sold The Commission is of the opinion that even if their beach slippers. At the same time Community producers' sales volume and market share dimi­ some of these staff cuts are linked with improved productivity, they are to a large extent due to the nished which meant that they were not only fall in production and sales. prevented from taking advantage of the expansion of the market but they also lost market shares that they had held for several years.

(c) Conclusion (48) Imports of beach slippers from other third coun­ tries are unlikely to be responsible for the injury sustained by the Community industry as the (44) On the basis of the information examined the volume of imports is marginal, of no comparison Commission is of the opinion that the Community with the quantities exported by China, and has industry is in a very bad state, mainly because of virtually no effect on the market. the considerable drop in production and in the rate of capacity utilization and the significant reduction in the volume of sales and market share . (49) The Chinese. Chamber of Commerce and Commu­ nity importers' associations claimed that another Although it has managed to maintain its price cause of injury lay in the competition exerted by levels, the Community industry has suffered losses certain substitute products, sales of which rose and is therefore sustaining major injury. during the period 1985-88 .

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In this connection the Commission would point (53) The importers associations put forward two main out that the consumption of beach slippers not arguments with regard to Community interest. only did not drop but on the contrary increased in the period 1985-88 . The first was that maintaining a source of low­ priced supplies was in the consumers' interest. In these circumstances the Commission cannot reasonably accept the argument whereby the increase in sales of other footwear, possible substi­ The strength of this argument is called in to ques­ tion by the Commission's findings according to tutes for beach slippers, but not like products, had which the benefits of low-priced imports were not caused injury to the Community beach slipper industry. necessarily passed on to the final consumers but often went no further than the traders themselves .

In any event, the Commission considers that even It should also be borne in mind that the recent if part of the injury suffered by the Community price advantages that consumers have occasionally industry could be attributed to substitute products, enjoyed are the result of unfair commercial prac­ the dumping found would still be responsible for tices and there is no justification for allowing them injury, which is itself considerable. to continue .

(50) No likely cause of the injury, other than the The price of Chinese beach slippers has fallen dumped imports, has been put forward. dramatically over the last few years and the slight increase brought about by anti-dumping measures will at most bring prices up to their previous level. (51 ) The Commission therefore concludes that the In any event, Chinese products will remain a lot serious injury sustained by the Community cheaper than those produced in the Community industry was caused by dumped imports of beach and they will not be prevented access to the slippers originating in the People's Republic of Community market. China .

The measures in question will not, therefore, prevent imports from playing their beneficial role for consumers. On the contrary such measures should result in increased production and capacity H. COMMUNITY INTEREST utilization by the Community industry which, as a result of lower costs, will be able to limit its price increases or even reduce its selling prices.

(54) The second argument put forward by the importers (52) The purpose of anti-dumping duties is, in general, was that Community producers did not have the to stop distortion of competition arising from capacity to satisfy market demand. unfair commercial practices and thus to re-establish open and fair competition on the Community market, which is fundamentally in the general The Commission would point out that this capacity Community interest. was reduced, at least in part, because of unfair imports.

With regard to this proceeding, the Commission considers that without measures to correct the This capacity can therefore be boosted if distortions effects of dumped Chinese imports, those firms still of competition caused by unfair commercial prac­ producing beach slippers may be forced to shut tices are eliminated. down completely. It is worth underlining that the firms in question are generally sound and competi­ tive following a decade of radical restructuring and (55) In assessing Community interest, the Commission modernization . also took account of the fact that beach slippers originating in China are subject to regional quanti­ tative limits. The Commission considered that The Commission feels that it would not be in the neither Community law nor international rules Community's interest to abandon a structurally prevented the imposition of anti-dumping duties sound industry at a time when, faced by unfair where regional quantitative limits existed, provided competition, it is sustaining serious injury which is that it was established that injury had been caused jeopardizing its short-term viability. despite these restrictions.

No L 365/34 Official Journal of the European Communities 28 . 12. 90

The Commission noted that the quantitative limits The anti-dumping duty to be imposed should in question, which concerned the French, Spanish therefore correspond to the margin of dumping and United Kingdom markets, had had a limited established. effect and had made no impact on prices, nor had any effect on unfair commercial practices in the rest of the Community, which is a major market for (b) Form of duty the products in question. (58) In the light of the economic structure of the expor­ (56) In the light of the above, the Commission ters and price variations for very similar models, concluded that it was in the Community interest to the Commission considers that the duty should adopt measures to eliminate the injury caused to take the form of a variable duty equal to the dif­ Community production by imports of beach slip­ ference between price per pair net, free at Commu­ pers originating in the People's Republic of China. nity frontier, not cleared through customs, and a floor price established on the basis of the normal value, which had originally been set for average In order to prevent further injury being caused sizes. However, in order to avoid : before the end of the proceeding, the measures should take the form of a provisional anti-dumping — creating a disadvantage for smaller sizes, duty. — imposing complicated calculations on impor­ ters and the authorities in charge of control and recovery,

I. PROVISIONAL DUTY this normal value was lowered to the level of the smallest sizes, namely ECU 1,15 per pair, free at Community frontier, not cleared through customs. This minimum price of ECU 1,15 will therefore (a) Level of duty constitute the basis for calculating the variable duty and will apply to all sizes. (57) In order to determine the level of the provisional duty the Commission took account of the margin of dumping and the amount of duty needed to eliminate the injury. J. FINAL PROVISIONS

(59) In the interests of proper management, a reason­ To this end it compared the weighted average able period should be fixed within which selling price of Chinese beach slippers during the concerned parties may make known their views in reference period (on a free-at-Community frontier writing and request a hearing from the Commis­ basis, plus customs duties and clearance charges) sion, with the average weighted production cost of stan­ dard beach slippers produced during the same period by Community manufacturers which had been the subject of on-the-spot checks, plus a HAS ADOPTED THIS REGULATION : reasonable profit margin.

7 % of the target price thus established was consi­ Article 1 dered a reasonable profit margin, which appeared to be the minimum needed to allow a beach 1 . A provisional anti-dumping duty is hereby imposed slipper producer to keep his plant working in on imports of espadrilles (beach slippers) originating in acceptable technical conditions and give him a rate the People's Republic of China falling within CN codes of return on invested capital close to that generally ex 6404 19 90 (Taric code 6404 19 90 * 10) and ex required in the sector in question. 6405 20 99 (Taric code 6405 20 99 * 10).

On this basis the Commission found a considerable 2. The amount of the duty shall be equal to the dif­ price difference. Expressed as a percentage of the ference between the sum of ECU 1,15 per pair and the free-at-Community frontier price, not cleared price per pair net, free at Community frontier, not cleared through customs, this price difference amounted to through customs. 221 % . The free-at-Community-frontier price shall be net if the It therefore transpires that the margin of dumping effective conditions of payment are such that payment is established, also expressed as a percentage of the made in the 30 days following the date of arrival of the free-at-Community-frontier price, not cleared goods in the customs territory of the Community. It shall through customs, is much lower than the percen­ be reduced by 1 % for each extra month's delay in tage needed to eliminate the injury. payment.

28 . 12 . 90 Official Journal of the European Communities No L 365/35

3 . For the purposes of this Regulation footwear with point of view in writing and request a hearing from the plaited fibre soles, whether or not strengthened with Commission within one month of this Regulation enter­ rubber or plastics over a variable surface, with a sole of ing into force. uniform thickness not exceeding 2,5 cm, shalt be consi­ dered as beach slippers.

4. The provisions in force with regard to customs Article 3 duties shall apply.

5. The release for free circulation in the Community of This Regulation shall enter into force on the day follo­ the goods mentioned in paragraph 1 shall be conditional wing that of its publication in the Official Journal of the on the deposit of a security equivalent to the amount of European Communities. the provisional duty.

Article 2 Subject to Articles 11 , 12 and 14 of Regulation (EEC) No 2423/88, it shall apply for four months unless the Council Without prejudice to Article 7 (4) (b) of Regulation (EEC) adopts definitive measures before the expiry of this No 2423/88, concerned parties may make known their period.

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

Done at Brussels, 21 December 1990 .

For the Commission Frans ANDRIESSEN Vice-President