23.12.2014   

EN

Official Journal of the European Union

L 367/1

(1)

The provisions of the Treaty, which apply to the outermost regions of the Union, of which the French overseas departments form part, do not authorise, in principle, any difference in taxation between local products and those from metropolitan France or the other Member States. However, Article 349 of the Treaty envisages the possibility of introducing specific measures for those regions because of the existence of permanent handicaps affecting the economic and social situation of the outermost regions.

(2)

Such specific measures must take account of the special characteristics and constraints of those regions, without undermining the integrity and the coherence of the Union legal order, including the internal market and common policies. The permanence and combination of handicaps suffered by the outermost regions of the Union as referred to in Article 349 of the Treaty (remoteness, raw-material and energy dependence, the obligation to build up larger stocks, the small size of the local market combined with a low level of export activity, etc.) increase production costs and, therefore, the cost price of goods produced locally, so that without specific measures they would be less competitive than those produced elsewhere, even taking into account the cost of transporting such goods to the French overseas departments. That would make it harder to maintain local production. For this reason, specific measures need to be taken in order to strengthen local industry by making it more competitive. Until 31 December 2014, Council Decision 2004/162/EC (1) authorises France, in order to restore the competitiveness of products produced locally, to apply exemptions or reductions to the dock dues for certain products produced in the outermost regions of Guadeloupe, French Guiana, Martinique, Réunion and, from 1 January 2014, Mayotte. The Annex to that Decision contains the list of products to which the tax exemptions or reductions may be applied. The difference between the taxation of products produced locally and that of other products may not exceed 10, 20 or 30 percentage points, depending on the product.

(3)

France has requested that a system similar to that contained in Decision 2004/162/EC be maintained beyond 1 January 2015. France points out that the handicaps listed above are permanent, that the taxation arrangements established by Decision 2004/162/EC have made it possible to maintain and, in some cases, develop local production, and that those arrangements have not constituted an advantage for the beneficiary companies since, overall, imports of products subject to differentiated taxation have continued to increase.

(4)

For each of the outermost regions concerned (Guadeloupe, French Guiana, Martinique, Mayotte and Réunion), France has sent the Commission five series of lists of products for which it proposes applying differentiated taxation of 10, 20 or 30 percentage points, depending on whether or not the products are produced locally. The French outermost region of Saint Martin is not affected.

(5)

This Decision implements the provisions of Article 349 of the Treaty and authorises France to apply differentiated taxation to the products for which it has been proven: firstly, that local production exists; secondly, that significant importation of goods (including from metropolitan France and other Member States) exists which could jeopardise the continuation of local production; and thirdly, that additional costs exist which increase the cost price of local production in comparison with products produced elsewhere, compromising the competitiveness of products produced locally. The authorised tax differential should not exceed the proven additional costs. Applying those principles would allow the provisions of Article 349 of the Treaty to be implemented without going beyond what is necessary and without creating an unjustified advantage for local production so as not to undermine the integrity and the coherence of the Union legal order, including safeguarding undistorted competition in the internal market and State aid policies.

(6)

In order to simplify the obligations of small enterprises, tax exemptions or reductions should affect all operators whose annual turnover is at least EUR 300 000. Operators whose annual turnover is under that threshold should not be subject to dock dues; however, to balance this, they cannot deduct the amount of that tax borne upstream.

(7)

Similarly, coherence with Union law means ruling out the application of a tax differential for food products benefiting from aid under Chapter III of Regulation (EU) No 228/2013 of the European Parliament and of the Council (2). That provision prevents the effect of the financial aid to agriculture granted under the specific supply arrangements from being cancelled out or reduced by higher taxation of subsidised products by means of dock dues.

(8)

The objectives of supporting the social and economic development of the French overseas departments, already provided for in Decision 2004/162/EC, are confirmed by the requirements regarding the purpose of the dock dues. It is a legal obligation that the revenues from the dock dues are to be incorporated into the resources of the French overseas departments' economic and tax regime and allocated to an economic and social development strategy involving aid for promoting local activities.

(9)

It is necessary to extend the period of application of Decision 2004/162/EC by a further six months until 30 June 2015. That period would enable France to transpose this Decision into its national law.

(10)

The arrangements are to apply for five years and six months, until 31 December 2020, when the current guidelines on regional State aid will also cease to apply. However, the results of applying those arrangements will first have to be assessed. France should, therefore, present, by 31 December 2017, a report on the application of the taxation arrangements introduced, in order to check the impact of the measures taken and their contribution to the maintenance, promotion and development of local economic activities, in the light of the handicaps affecting the outermost regions. The report should check that the tax benefits granted by France to products produced locally do not go beyond what is strictly necessary and that those benefits are still necessary and proportional. The report should also contain an analysis of the impact of the arrangements introduced on prices in the French outermost regions. On the basis of that report, the Commission should submit a report to the Council and, if necessary, a proposal for adapting the provisions of this Decision in the light of the findings.

(11)

In order to avoid any kind of legal vacuum, it is necessary for this Decision to apply from 1 July 2015.

(12)

This Decision is without prejudice to the possible application of Articles 107 and 108 of the Treaty.

(13)

The purpose of this Decision is to establish the legal framework for the dock dues from 1 January 2015. Given this urgency, an exception should be made to the eight-week period laid down in Article 4 of Protocol No 1 on the role of national parliaments in the European Union annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union,

(a)

10 percentage points for the products listed in part A of the Annex;

(b)

20 percentage points for the products listed in part B of the Annex;

(c)

30 percentage points for the products listed in part C of the Annex.

23.12.2014   

EN

Official Journal of the European Union

L 367/8

(1)

The Union and Canada should expand their customs cooperation to cover matters of supply chain security and related risk management with a view to increasing end-to-end supply chain security and at the same time facilitating legitimate trade.

(2)

In accordance with Council Decision 2012/643/EU (1), the Agreement between the European Union and Canada on customs cooperation with respect to matters related to supply chain security (the ‘Agreement’) was signed on 4 March 2013, subject to its conclusion.

(3)

The position to be adopted by the Union within the EU-Canada Joint Customs Cooperation Committee (JCCC), when called upon to adopt acts having legal effects, should be decided in accordance with the procedure set out in Article 218(9) of the Treaty on the Functioning of the European Union. Where necessary, other positions to be taken by the Union within the JCCC should be established by the Council in accordance with Article 16 of the Treaty on European Union.

(4)

The Agreement should be approved on behalf of the Union,

23.12.2014   

EN

Official Journal of the European Union

L 367/10

—

in the European Union: the competent services of the European Commission and the customs authorities of the Member States of the European Union;

—

in Canada: the governmental administration designated by Canada as responsible for administering its customs laws.

(a)

reinforcing the customs-related aspects of securing the logistics chain of international trade while at the same time facilitating legitimate trade;

(b)

establishing minimum standards, to the extent practicable, for risk management techniques and related requirements and programmes;

(c)

working towards and, where appropriate, establishing mutual recognition of risk management techniques, risk standards, security controls, supply-chain security and trade partnership programmes including equivalent trade facilitation measures;

(d)

exchanging information for supply-chain security and risk management; any exchange of information under this Agreement shall be subject to the confidentiality of information and personal data protection requirements set out in Article 16 of the CMAA as well as any confidentiality and privacy requirements set out in the legislation of the Contracting Parties;

(e)

establishing contact points for exchanging information for supply-chain security;

(f)

introducing, where appropriate, an interface for data exchange, including for pre-arrival or pre-departure data;

(g)

developing a strategy that allows the customs authorities to cooperate in the area of cargo inspection;

(h)

collaborating, to the extent practicable, in any multilateral fora where issues related to supply-chain security may be appropriately raised and discussed.

(a)

identifying any regulatory or legislative changes required to implement this Agreement;

(b)

identifying and establishing measures to enhance information exchange mechanisms;

(c)

identifying and establishing best practices, including best practices for the harmonization of advance electronic cargo information requirements with international standards on inbound, outbound and transit shipments;

(d)

defining and establishing risk analysis standards for the information required to identify high-risk shipments imported into, transhipped through, or transiting Canada and the European Union;

(e)

defining and establishing measures to harmonize risk assessment standards;

(f)

defining minimum control standards and methods by which those standards may be met;

(g)

improving and establishing standards for trade partnership programmes designed to improve supply-chain security and facilitate the movement of legitimate trade;

(h)

defining and carrying out concrete steps to establish mutual recognition of risk management techniques, risk standards, security controls and trade partnership programmes including equivalent trade facilitation measures.

23.12.2014   

EN

Official Journal of the European Union

L 367/14

(1)

Pursuant to Article 10(4) to (8) of Council Regulation (EC, Euratom) No 1150/2000 (2), the Commission is to calculate and inform Member States of adjustments to the own resources based on value added tax referred to in point (b) of Article 2(1) of Council Decision 2007/436/EC, Euratom (3) (‘VAT resource’) and on gross national income (GNI) referred to in point (c) of Article 2(1) of that Decision (‘additional resource’) in time for them to enter these adjustments in the Commission's account referred to in Article 9(1) of Regulation (EC, Euratom) No 1150/2000 on the first working day of December.

(2)

Under exceptional circumstances, these adjustments may result in very high amounts which may exceed substantially, as regards some Member States, two monthly twelfths to be made available as VAT resources and the additional resource, and in total, for all Member States, half of aggregate monthly twelfths.

(3)

For some Member States the obligation to make available such high amounts may represent a high financial burden which may cause a severe fiscal strain on those Member States, particularly towards the end of the year.

(4)

Therefore, Member States should have the possibility to request the postponement of the making available of these amounts until the first working day of September of the following year if certain conditions are met.

(5)

Without prejudice to the existing obligation to make available the requested amounts to the Commission account, any Member State which decides to apply this option should transmit a request to the Commission, well in advance of the first working day of December, containing the date or dates of making available the adjustments, in order to allow an efficient management of the Union's cash requirements. Any delay in making available those adjustments on the date or dates communicated to the Commission should give rise to interest under the conditions of Article 11 of Regulation (EC, Euratom) No 1150/2000.

(6)

The amounts to be made available on the first working day of December 2014 as a result of adjustments are of an unprecedented size, a situation that could not have been foreseen when Regulation (EC, Euratom) No 1150/2000 was adopted.

(7)

In order to prevent this exceptional and unforeseen situation from creating unreasonably heavy budgetary constraints on Member States just before the year-end, the option provided for in this Regulation should be applicable for adjustments which, pursuant to Regulation (EC, Euratom) No 1150/2000, had to be entered in the Commission's accounts on the first working day of December 2014. In this regard, the Member States wishing to benefit from that option have already transmitted a formal request with a payment schedule to the Commission before the first working day of December 2014.

(8)

Regulation (EC, Euratom) No 1150/2000 should therefore be amended accordingly,

23.12.2014   

EN

Official Journal of the European Union

L 367/16

(1)

In accordance with Article 11(6) of Regulation (EU) No 1307/2013, Belgium, Bulgaria, the Czech Republic, Denmark, Estonia, Ireland, Greece, Spain, Italy, Cyprus, Latvia, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Slovenia, Slovakia, Finland, Sweden and the United Kingdom notified the Commission by 1 August 2014 of their decisions taken under Article 11 of that Regulation, including the estimated product of reductions for the calendar years 2015 to 2019.

(2)

In accordance with Article 7(2) of Regulation (EU) No 1307/2013, the estimated product of the reduction of payments notified by Member States and referred to in Article 11(6) of that Regulation is to be made available as Union support for measures under rural development programming. As a result, Annex I to Regulation (EU) No 1305/2013 and Annex III to Regulation (EU) No 1307/2013 need to be adapted according to the amounts notified by Member States.

(3)

In addition, in certain cases the product of the reduction of payments may be null due, in particular, to the structures of agricultural holdings in Member States and the anticipated distribution of direct payments and the possibility for Member States to apply Article 11(2) of Regulation (EU) No 1307/2013. Accordingly, Belgium, Luxembourg, Malta, Austria, Slovenia and Finland notified the Commission of their estimated product of reduction which is null for all the calendar years 2015 to 2019.

(4)

Belgium, Germany, France, Croatia, Lithuania and Romania have decided to make use of Article 11(3) of Regulation (EU) No 1307/2013.

(5)

In accordance with Article 136a(1) of Council Regulation (EC) No 73/2009 (3) and Article 14(1) of Regulation (EU) No 1307/2013, Belgium, the Czech Republic, Denmark, Germany, Estonia, Greece, the Netherlands and Romania notified the Commission by 1 August 2014 of their decision to transfer a certain percentage of their annual national ceilings for calendar years 2015 to 2019 to rural development programming financed under the European Agricultural Fund for Rural Development (EAFRD) as specified in Regulation (EU) No 1305/2013.

(6)

In accordance with the third subparagraph of Article 136a(2) of Regulation (EC) No 73/2009 and Article 14(2) of Regulation (EU) No 1307/2013, Hungary notified the Commission by 1 August 2014 of its decision to transfer to direct payments a certain percentage of the amount allocated to support for measures under rural development programming financed under the EAFRD in the period of 2016 to 2020 as specified in Regulation (EU) No 1305/2013.

(7)

Annex I to Regulation (EU) No 1305/2013 and Annexes II and III to Regulation (EU) No 1307/2013 should therefore be amended accordingly,

(8)

As this Regulation is essential for a smooth and timely adoption of rural development programmes, it is appropriate that it enters into force on the day following that of its publication in the Official Journal of the European Union,

23.12.2014   

EN

Official Journal of the European Union

L 367/22

(1)

By Council Implementing Regulation (EU) No 248/2011 (3), the Council imposed a definitive anti-dumping duty on imports of certain continuous filament glass fibre products currently falling within CN codes 7019 11 00, ex 7019 12 00 and 7019 31 00 and originating in the People's Republic of China.

(2)

On 12 December 2013, the European Commission (the Commission), announced the initiation of an anti-subsidy proceeding with regard to imports into the European Union of certain filament glass fibre products originating in the People's Republic of China (‘the PRC’ or ‘the country concerned’) by a notice published in the Official Journal of the European Union (the Notice of Initiation of the anti-subsidy investigation) (4).

(3)

The investigation was initiated by the Commission following a complaint lodged on 28 October 2013 by the European Glass Fibre Producers Association (APFE) (the complainant) on behalf of producers representing more than 25 % of the total Union production of certain filament glass fibre products. The complaint contained prima facie evidence of subsidisation of certain filament glass fibre products and of material injury caused by it, which the Commission considered sufficient to justify the initiation of an investigation.

(4)

In accordance with Article 10(7) of Regulation (EC) No 597/2009 (the basic anti-subsidy Regulation), the Commission notified the government of the PRC prior to the initiation of the investigation that it had received a properly documented complaint alleging that subsidised imports of certain filament glass fibre products originating in the PRC were causing material injury to the Union industry. The Commission invited the government of the PRC for consultations with the aim of clarifying the situation as regards the content of the complaint and arriving at a mutually agreed solution.

(5)

The government of the PRC accepted the offer for consultations which were subsequently held on 5 December 2013. During the consultations, no mutually agreed solution could be found. However, the Commission took due note of comments made by the government of the PRC regarding the schemes listed in the complaint. Following the consultations, a written submission was received from the government of the PRC on 9 December 2013.

(6)

Additional consultations were offered to the government of the PRC in regard to additional schemes that were identified during the course of the investigation. The government of the PRC however did not accept the offer as they claimed to have been provided insufficient information in regard to these schemes.

(7)

The Commission received a request for the initiation of a partial interim review of the anti-dumping measures in force (5), limited in scope to the examination of injury, pursuant to Article 11(3) of Council Regulation (EC) No 1225/2009 (the basic anti-dumping Regulation). The request was lodged on 28 October 2013 also by the APFE, on behalf of Union producers representing more than 25 % of the total Union production of certain filament glass fibre products.

(8)

Having determined that sufficient evidence existed to justify the initiation of a partial interim review, the Commission announced, on 18 December 2013, by a notice published in the Official Journal of the European Union (Notice of Initiation of the anti-dumping partial interim review) (6) the initiation of a partial interim review under Article 11(3) of the basic anti-dumping Regulation.

(9)

One exporting producer claimed that existing measures imposed by Council Implementing Regulation (EC) No 248/2011 are null and void as far as it is concerned and that the current review investigation concerning the existing measures imposed by that regulation should therefore be terminated. It argued that the existing measures are in breach of the WTO Anti-Dumping Agreement since this exporting producer was refused individual treatment under the provisions of Article 9(5) of the basic anti-dumping Regulation as they existed at the time of adoption of that regulation. In support of its claim it refers to the WTO Appellate Body Report of 28 July 2011 in case DS397 (7).

(10)

Following the WTO Appellate Body Report of 28 July 2011 in case DS397, Article 9(5) of the basic anti-dumping Regulation was amended. (8) The amendment applies to all investigations initiated following its entry into force, which was 6 September 2012. With regard to exporting producers subject to measures that were already in force before that date the Commission published a Notice on 23 March 2012 (9) inviting any exporting producer in non-market economy countries to request a review if they considered that the measures to which they are subject should be reviewed in the light of the Appellate Body Report mentioned above. The Implementing Regulation (EU) No 248/2011 was specifically mentioned in that Notice. The Commission did not receive such request for a review from this exporting producer, nor did the exporting producer request an interim review in accordance with Article 11(3) of the basic Regulation.

(11)

Therefore the validity of the existing measures is not at stake and the claim is rejected.

(12)

The investigation of subsidisation and injury covered the period from 1 October 2012 to 30 September 2013 (‘the investigation period’ or ‘IP’). The examination of the trends relevant for the assessment of injury covered the period from 1 January 2010 to the end of the IP (‘the period considered’).

(13)

The injury analyses performed in both the anti-subsidy and the anti-dumping partial interim review are based on the same definition of the Union industry, the same representative Union producers and the same investigation period and led to identical conclusions unless otherwise specified. This was considered appropriate in order to streamline the injury analysis and to reach consistent findings in both investigations. For this reason, comments on injury aspects put forward in any one of these proceedings were taken into account in both investigations.

(14)

In both Notices of Initiation, the Commission invited interested parties to contact it in order to participate in both investigations. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers and the authorities of the PRC, known importers, suppliers and users, traders, as well as associations known to be concerned about the initiation of both investigations and invited them to participate.

(15)

Interested parties had an opportunity to comment on the initiation of both investigations and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(16)

The Commission announced in both Notices of Initiation that it might limit to a reasonable number the exporting producers in the PRC, the unrelated importers and Union producers that would be investigated by selecting samples in accordance with Article 17 of the basic anti-dumping Regulation and Article 27 of the basic anti-subsidy Regulation.

(17)

In both Notices of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of production in the Union and sales volumes on the Union market of the like product during the IP and geographical spread. This sample consisted of manufacturing plants of three Union producers located in Belgium, France and Slovakia (10), representing around 52 % of the total Union production and 49 % of all sales on the Union market. Therefore, the sample was considered representative for the Union industry. The Commission invited interested parties to comment on the provisional sample.

(18)

During the investigations, the government of the PRC alleged that a different sampling methodology for the Union producers was applied in the original anti-dumping investigation than the one in the current investigations without motivation. The government of the PRC stated (i) that the Commission had already selected a sample prior to the initiations, therefore, the Commission decided prior to the initiations that a sample was necessary, (ii) that in the original investigation all parties that wished to be included in the sample had to provide information to the Commission within 15 days from initiation, while in the present case, the producers already included in the sample are not required to do so, (iii) that parties that wished to be included in the sample were not provided in both Notices of Initiation with any information on what information they are required to provide in order to be included in the sample and that no information as regards the production and sales volume represented by the sampled producers had been provided, (iv) that the used selection criterion ‘this sample represents the largest representative volume of producers which can reasonably be investigated with the time available’ was not included in Article 17 of the basic anti-dumping Regulation and a sample selected on this basis was not consistent with this provision.

(19)

In both Notices of Initiation the Commission explained that in view of the large number of Union producers and in order to complete the investigations within the time limits, it resorted to sampling and a provisional sample was at the same time proposed. The same methodology, i.e. the application of sampling, was used as in the previous investigation. The use of a provisional sample did not change the methodology but merely allowed to be more efficient as it allowed gaining time while fully respecting the rights of defence. Indeed, the Commission gave opportunity to other Union producers who consider that there are reasons why they should be included in the sample to contact the Commission or to any other interested parties to submit any other relevant information with regard to the sample. The final sample should take into account all comments received, if any. As no comments were received on the proposed sample, the provisional sample was confirmed. As to the second claim, the producers who were provisionally selected for the sample had filled in the standing form which included the necessary information for the Commission to select a provisional sample. The standing form and the replies have been available for inspection in the non-confidential file. As to the third claim, parties that wished to be included were invited to contact the Commission within 15 days of the date of the publication of both Notices of Initiation and they had the opportunity to consult the non-confidential file where the standing forms could be found. These standing forms contained information on production and sales volume. The fourth claim is also unfounded because Article 17(1) of the basic anti-dumping Regulation clearly refers to the largest representative volume which can reasonably be investigated within the time available.

(20)

Following the definitive disclosure, the government of the PRC reiterated its claims as to the alleged procedural inconsistency in the selection of the Union producers' sample prior to both initiations and highlighted that: (i) the Commission's justification of meeting the investigation deadlines is unsustainable since Article 17(2) of the basic anti-dumping Regulation and Article 27(2) of the basic anti-subsidy Regulation clearly envisage sampling after both initiations and pursuant to comments within three weeks of both initiations, (ii) a provisional sample is discriminatory or un-objective and would have worked as a demotivating factor for the other Union producers to come forward, and (iii) the Commission's failure to provide the other Union producers three weeks to come forward.

(21)

Article 17(2) of the basic anti-dumping Regulation and Article 27(2) of the basic anti-subsidy Regulation state that ‘preference shall be given to choosing a sample in consultation with, and with the consent of, the parties concerned, provided such parties make themselves known and make sufficient information available, within three weeks of initiation of the investigation’. As to the first claim, the basic anti-dumping Regulation and basic anti-subsidy Regulation do not prevent the Commission from suggesting at the time of initiation a provisional sample on which the parties are invited to comment. Moreover, given that the Union producers (or at least a large part of them) are supporting the complaint and taking into account the information obtained in the standing forms, the Commission had the necessary information with regard to the Union industry at its disposal to select a provisional sample at initiation stage. This knowledge makes the sampling exercise of Union producers different from the one applied to exporting producers. As to the second and third claim, the Notices of Initiation stated that Union producers who consider that they should be included in the sample must contact the Commission within 15 days. The Commission does not see how this infringes the basic Regulation or can be considered discriminatory, un-objective, let alone demotivating.

(22)

The government of the PRC claimed that the sample is not representative because no company with significant captive production had been included and therefore a part of the domestic industry had simply not been assessed.

(23)

This claim is rejected as the sampled Union producers indeed had captive sales. Moreover, the government of the PRC did not indicate which Union producer should have been included and which one should have been excluded.

(24)

One exporting producer claimed that the Union producers' sample was not representative as none of the sampled Union producers produced/sold chopped strand mats.

(25)

Indeed, the sampled entities of the three Union producers did not produce chopped strand mats but they did produce filament mats as well as the other main product types. Therefore, the sampled entities were considered to be representative, also because they represented around 52 % of the total Union production, 49 % of all sales on the Union market, and represented a good geographical spread. The fact that one of the wide varieties of product types was not produced by the sampled Union producers does not alter this conclusion.

(26)

To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in both Notices of Initiation.

(27)

Given that only two unrelated importers replied to the sampling form, no sampling was necessary.

(28)

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

(29)

Eight exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 27(1) of the basic anti-subsidy Regulation and Article 17(1) of the basic anti-dumping Regulation, the Commission selected a sample of three exporting producers based on the largest representative volume of exports which could reasonably be investigated within the time available. In accordance with Article 27(2) of the basic anti-subsidy Regulation and Article 17(2) of the basic anti-dumping Regulation, all known exporting producers concerned, and the authorities of the country concerned, were invited to comment on the provisionally selected sample. No comments were made. The Commission thus decided to retain the proposed sample and all interested parties were accordingly informed of the finally selected sample.

(30)

The sample of exporting producers or groups of exporting producers is the following:

(31)

The sample represented 78 % of the total export sales from the PRC in volume to the Union during the IP, based on the replies to the sampling forms.

(32)

The Commission sent questionnaires to the government of PRC, all Chinese exporting producers that had so requested, as well as to the sampled Union producers, users and trade associations that made themselves known within the time limits set out in both Notices of Initiation.

(33)

Questionnaire replies were received from the government, three sampled Chinese exporting producers, from the three sampled Union producers, from 14 users and from two unrelated importers. However, the reply of one of the users was insufficient which did not allow the Commission to carry out a meaningful analysis of these data despite having sent several reminders.

(34)

Moreover, an association representing the glass industries ‘Glass Alliance Europe’ came forward as an interested party on behalf of its members and submitted a position statement.

(35)

Written submissions were also received from several associations of users, notably the ‘Danish Wind Industry Association’, the ‘Danish Plastics Federation’ and the ‘Groupement de la Plasturgie Industrielle et des Composites (GPIC)’, as well as from Siemens Wind Power AG.

(36)

In addition, the China Chamber of Commerce for Import/Export of Light Industrial products & Arts-Crafts (CCCLA) submitted comments.

(37)

The Commission sought and verified all the information deemed necessary for the determination of subsidisation, of injury and of the Union interest. Verification visits pursuant to Article 16 of the basic anti-dumping Regulation and Article 26 of the basic anti-subsidy Regulation were carried out at the government of PRC and at the premises of the following companies:

(38)

The government of the PRC claimed, in summary, that its rights of defence in relation to access to the file open for inspection by interested parties were violated because information was missing from the non-confidential file without ‘good cause’ being shown or sufficiently detailed summaries had not been provided, or exceptionally, the reasons for not providing a non-confidential summary had not been given.

(39)

The Commission considered that the non-confidential file open for inspection by interested parties contained sufficient information in order to allow interested parties to inspect the data that was used by the Commission in its analysis and the claim was therefore considered unfounded. The government was informed of the reasons why the Commission considered that the claims were unfounded.

(40)

Following the definitive disclosure, the government of the PRC as well as one exporting producer reiterated that the confidentiality provision was used too extensively and requested disclosure of the product types sold by the Union producers as well as the total quantities per PCN.

(41)

The Commission considers that there was no breach of the rights of defence as all exporting producers have received a specific disclosure of the PCNs produced by the sampled Union producers on which there was competition with the PRC. Therefore this claim was rejected.

(42)

The product concerned by both investigations is the same as the product defined in the Council Implementing Regulation (EU) No 248/2011 and described in both Notices of Initiation, namely chopped glass fibre strands, of a length of not more than 50 mm; glass fibre rovings, excluding glass fibre rovings which are impregnated and coated and have a loss on ignition of more than 3 % (as determined by the ISO Standard 1887); and mats made of glass fibre filaments excluding mats of glass wool (‘the product concerned’ or ‘filament glass fibre products’), currently falling within CN codes 7019 11 00, ex 7019 12 00 and 7019 31 00 (the latter code replaced 7019 31 10 on 1.1.2014) and originating in the PRC.

(43)

The product concerned is the raw material most often used to reinforce thermoplastic and thermoset resins in the composites industry. The resulting composite materials (filament glass fibre reinforced plastics) are used in a large number of industries: automotive industry, electric/electronics, wind mill blades, building/construction, tanks/pipes, consumer goods, aerospace/military, etc.

(44)

There are three basic types of filament glass fibre products covered by this proceeding — namely chopped strands (11), rovings (12) and mats (13) (other than of glass wool). The investigation has shown that, despite differences in appearance and possible differences in final applications of various types, all the different types of the product concerned share the same basic physical, chemical and technical characteristics and are basically used for the same purposes.

(45)

Following the publication of both Notices of Initiation, CCCLA commented that both Notices of Initiation referred to CN code 7019 31 10, whereas the complainant referred to CN code 7019 31 00 and that the latter code no longer exists. They stated that the products previously classified within CN code 7019 31 00 are now classified under two different CN codes: 7019 31 10 (glass fibre mats of filaments) and 7019 31 90 (glass fibre mats of other). Given that the present investigations cover certain filament glass fibre products, the CCCLA believes that the products classified under CN code 7019 31 90, namely ‘mats made of glass fibre with no filament’, should be excluded from the scope of the product concerned.

(46)

This claim is beside the point because such product is not product concerned in the first place.

(47)

The complainant referred to the CN code ex 7019 31 00 and explicitly stated that glass wool mats (i.e. other mats or mats made of glass fibre with no filament) are excluded. This is why ‘ex’ is mentioned before the CN code.

(48)

Both Notices of Initiation were published in December 2013 and stated ‘currently falling within CN codes […] 7019 31 10’. Given that from 1 January 2012, the products previously falling under CN code 7019 31 00 were divided into CN codes 7019 31 10 and 7019 31 90, the Notice of Initiation does not include ‘mats made of glass fibre with no filament’ as it stated ‘currently falling under CN codes […] 7019 31 10’.

(49)

The current Regulation however states ‘currently falling within CN codes […] 7019 31 00’ given that the two CN codes 7019 31 10 and 7019 31 90 were merged again as from 1 January 2014 given that the CN code 7019 31 90 stayed in practice empty (as glass fibre mats of other, namely glass wool mats, were rather classified under the CN code 7019 39 00).

(50)

Therefore, the claim for the exclusion of the CN code 7019 31 90 is not relevant.

(51)

One user requested texturised rovings (14) to be removed from the product scope based on the fact that the Union filament glass fibre manufactures do not produce them.

(52)

However, three companies in the Union were identified as producers of texturised rovings with enough capacity to supply market needs. The investigations showed that, despite possible differences in final applications, all the different types of the product concerned share the same basic physical, chemical and technical characteristics and are basically used for the same purposes. The request to exclude texturised rovings from the product scope is therefore denied.

(53)

Following the definitive disclosure, the government of the PRC claimed that texturised rovings should be excluded as (i) only one Union producer supplied texturised rovings to the market in limited quantities and that therefore any imports of such products could not injure the Union industry, (ii) the fact that texturised rovings are different from direct rovings as the latter have better cross directional strength of a pultruded composite profile and a different production process and (iii) contrary to what was done in the original anti-dumping investigation in the context of yarns, the Commission considers that the limited substitutability is not a significant factor to permit the exclusion of texturised rovings.

(54)

As to the first claim, the Commission reiterates that there are several producers in the Union that have the capacity to supply the market needs of texturised rovings, but only one is currently selling this product type. The argument of the government of the PRC that only one Union producer is actually selling the product is rather an indication of injury as this means that users have switched to other suppliers outside the Union, in particular from the PRC.

(55)

As to the second claim, the production process for texturised rovings is identical to the one of ‘normal’ rovings, with the exception that there is one extra step of blowing air inside the roving, which requires only relatively inexpensive additional equipment and does not change the essential technical and physical characteristics of the product. The texturised roving merely appears somewhat bushier than the ‘normal’ roving.

(56)

As to the third claim, the Commission followed the same approach as in the previous investigation where texturised rovings were also part of the product concerned and a request to exclude them was rejected. No arguments were brought forward that would lead to a different conclusion.

(57)

The request to exclude texturised rovings from the product scope is therefore denied.

(58)

The government of the PRC requested that products on which the Union industry does not face competition from Chinese imports (as stated in the non-confidential version of the anti-subsidy complaint), be removed from the product scope. The referred products were wet use chopped strands (WUCS) and mats.

(59)

WUCS have a limited shelf life and higher transport costs due to the additional weight of the water content. WUCS are nevertheless globally traded. The investigation has shown that, despite some difference in appearance and possible differences in final applications, all the different types of the product concerned share the same basic physical, chemical and technical characteristics and are basically used for the same purposes. WUCS and mats, like any other product types of the product concerned, are used as reinforcement material. Moreover, the claim of the government of the PRC that some Chinese filament glass fibre products are not yet present in large quantities on the Union market does not preclude a change in future business behaviour as to exports of these particular types. Therefore, the request to exclude these products from the product scope is denied.

(60)

Following the definitive disclosure, the government of the PRC claimed that (i) only one Union producer is producing WUCS and that therefore any imports of such products could not injure the Union industry, (ii) the Union producers are not suffering any injury on the above mentioned products as the Union industry claimed in the open version of the complaint that they can make a profit of above 8 %-10 % on those products, (iii) the fact that WUCS have a higher water content, limited shelf life and a different production process and therefore physically and chemically different from the normal chopped strands and (iv) contrary to what was done in the previous investigation in the context of yarns, the Commission considers that the limited substitutability is not a significant factor to permit the exclusion of the WUCS and the mats.

(61)

The first claim is rejected as several Union producers sell WUCS and therefore the Union industry is not excluded from injury on this product type.

(62)

As to the second claim, the fact that some product types at certain points in time are profitable is not sufficient reason to exclude those product types. In addition, WUCS are imported into the Union in much lower quantities than the other filament glass fibre products. The profit margin for this sole product type is therefore not representative for the product concerned.

(63)

As to the third claim, the product concerned is not defined by reference to its water content. The water content of WUCS does therefore not justify its exclusion. In addition, the production process of WUCS is the same as the one for dry use chopped strands (DUCS), with one production step less which consists of the drying phase.

(64)

As to the fourth claim, the Commission followed the same approach as in the previous anti-dumping investigation where WUCS were also part of the product concerned. No arguments were brought forward that would lead to a different conclusion.

(65)

Therefore, the request to exclude WUCS from the product scope is denied.

(66)

Similar to the previous anti-dumping investigation, the product concerned and the filament glass fibre products produced and sold on the domestic market of the PRC, as well as the filament glass fibre products produced and sold in the Union by the Union industry were found to have the same basic physical, chemical and technical characteristics and uses. Therefore, these products are like products for the purposes of the present investigations within the meaning of Article 1(4) of the basic anti-dumping Regulation and Article 2(c) of the basic anti-subsidy Regulation.

(67)

The 12th Five Year Plan for National Economic and Social Development of the PRC highlights the strategic vision of the government of the PRC for improvement and promotion of key industries, includes, amongst others, the production of glass fibre products. In particular, Chapter 9, of the 12th Five Year Plan, which concerns the transformation and upgrade of the manufacturing industry states:

‘We will focus on developing new materials such as photovoltaic glass, ultra-thin substrate glass, special glass fibre and, special ceramics.’

(68)

Section 3 of Chapter 9 of the abovementioned Plan concerning the technological upgrading of enterprises states specifically that the government of PRC ‘…will encourage enterprises to become better able to develop new products, raise the technological content and value added of their products and update and upgrade their products more quickly.’

(69)

Moreover Chapter 10, Section 1 of the same Plan stipulates the following:

‘The development focus for the new material industry will be on new functional materials, advanced structural materials, high-performance fibres and the composite material made from them, and general-purpose basic materials’

(70)

The importance of innovation and new materials in general is clearly spelled out both in the ‘12th Five Year Industrial Technology Innovation Programme’ as well as in the ‘National Long-term Science and Technology Development Plan (2006-2020)’.

(71)

In addition, ‘The Industrial Restructuring Guidance Catalogue 2011’ (Decision No 9) explicitly mentions as an encouraged industry ‘Wire drawing of E-glass fibre furnace […], development and production of high-performance fibrerglass and its product.’ Also, the ‘Guideline Catalogue For Foreign Investment Industries’, which lists industries in which foreign investments are encouraged (15), refers explicitly to the production of fibreglass products and special fibreglass.

(72)

The government of the PRC claimed that these plans are only guidance and not binding. However, as it is clearly stated in the 12th Five Year Plan it is legally binding:

‘This Plan, upon deliberation and approval by the National People's Congress, bears legal validity.’

(73)

Following disclosure, the government of the PRC argued that the product concerned is only standard fibre glass products (E-glass) and not the more technologically advanced high performance glass fibre (special purpose fibre glass or S-glass). Therefore, the product concerned by this investigation falls outside the scope of encouraged industries since only special fibre glass or high performance fibres are among those industries that are encouraged. The government of the PRC refers amongst others to the 12th Five Year Plan which only refers to ‘high performance fibres’ and ‘special fibreglass’.

(74)

First, the product concerned is certain products of filament glass fibre. The product definition makes no distinction whether those products are made of standard fibre glass fibres (hereafter referred to as E-glass) or special glass fibre (s-glass). Second, no interested party came forward with a product exclusion request claiming that special fibre glass should not be part of the product scope. Third, the government of the PRC did not dispute the fact that the government is encouraging the development of ‘special glass fibres’. Indeed, even standard fibre glass products are referred to as an industry for which foreign investments are encouraged (see recital 71).

(75)

In any event, even if one were to accept that only the development of high performance fibreglass (e.g. S-glass) is encouraged by the government of PRC, the investigation did not reveal any distinction between a standard fibre glass industry on the one hand and a special fibre glass industry on the other hand. On the contrary, fibre glass products, whether made from E-glass or from a high performance glass fibre, such as S-glass, are all produced by the same fibre glass industry. In this regard the Commission found, in particular, that all the sampled Chinese exporting producers use both standard fibre glass (E-glass) as well as high performance glass fibre (e.g. S-glass) in their production process, and that there is no mechanism in place to limit the support provided, be it in the form of preferential loans or provision of land use rights, to one segment of the production. It follows that the explicit encouragement for developing high performance glass fibre products cannot, either by law or by fact, exclude the basic fibre glass industry from the overall strategic policy to encourage enterprises to become better able to develop new products, raise the technological content and value added of their products and update and upgrade their products more quickly.

(76)

It follows from the above that the claim that the product concerned does not form part of the encouraged industry is ill-founded and is therefore rejected.

(77)

In addition, ‘Decision No 40 of the State Council on Promulgating and Implementing the “Temporary Provisions on Promoting the Industrial Structure Adjustment”’ (which, together with ‘Temporary Provisions on Promoting the Industrial Structure Adjustment’ are referred to as ‘Decision No 40’) states that the government of the PRC will actively support the development of different types of industries (16).

(78)

Although Decision No 40 does not explicitly refer to the filament glass fibre industry or more generally to the new material industry, it nevertheless instructs all financial institutions to provide credit support to encouraged projects only and envisages the implementation of ‘other preferential policies on the encouraged projects’ (17). It can therefore be concluded that the provisions of the Decision No 40 were applicable to the filament glass fibre industry.

(79)

The government of the PRC claimed that Decision No 40 only implies that encouraged industries should receive credit support ‘according to the credit principles’ and that it cannot be inferred that such support should be given on a preferential basis.

(80)

The investigation has shown that the sampled companies benefited from the preferential lending policies. Indeed some of the loss making companies continued to obtain financing on preferential terms. The Commission therefore rejects the government of the PRC's assertion that lending to the filament glass fibre industry was done ‘according to the credit principles’. The key point remains that according to Decision No 40, all financial institutions shall provide credit to encouraged industries, which includes the filament glass fibre industry, and that that support is de facto provided on preferential terms.

(81)

Furthermore, the ‘National Outline for the Medium and Long-term Science and Technology Development (2006-2020)’ undertakes to ‘give the first place to policy finance’, ‘encourage financial institutions to grant preferential credit support to major national scientific and technological industrialisation projects’, to ‘Encourage financial institutions to improve and strengthen financial services to high-tech enterprises’ and to ‘implement the preferential tax policies to promote the development of high-tech enterprises’.

(82)

Filament glass fibre production falls under the description of a high technology enterprise, as is shown by the number of manufacturers with New and High Technology status in PRC. Indeed the investigation revealed that some of the sampled companies received the certificate of High and New Technology Enterprises, which could benefit from the preferential treatment outlined in the ‘National Outline for the Medium and Long-term Science and Technology Development (2006 — 2020)’ referred to above.

(83)

During the verification visit to one of the companies in the PRC, it was revealed that the company had replaced the audited financial statement that had been originally submitted to the Commission in its reply to the anti-subsidy questionnaire. The company did not voluntarily disclose this information and the existence of a different audited financial statement was only revealed when the company was asked to provide an original copy of the financial statement. In addition, this new statement was only made available in Chinese. Since circulating two sets of audit financial statements is in breach of International Standards on Auditing (No 560: concerning ‘subsequent events’), the verification team emphasised that this was a serious concern as it cast doubts about the credibility of the submitted financial statements. The company explained that the audited financial statements initially submitted in the reply to the questionnaire had contained errors and had therefore been replaced by a new version issued by the same auditing company and backdated and re-issued with the same sequential number as the original financial statements report which had been destroyed.

(84)

After the verification visit and once the translation of the ‘second’ set of financial statements were available, the Commission sent a letter to the company outlining the specific and detailed reasons why it considered that some of the data provided in the questionnaire could not be deemed as verified. The company was informed that the Commission may decide to base its findings on facts available pursuant to Article 28(1) of the basic anti-subsidy Regulation and was granted the opportunity to comment.

(85)

The company provided its comments both in writing as well as during a hearing with the Hearing Officer. Its response indicated the existence of yet another (third) audited financial statements (in the format used for listed companies). Although there did not appear to be substantial differences between the ‘second’ and the ‘third’ statements, the latter was however much more detailed, and comprehensive. It had already been issued and albeit available to the company during the verification visit (18) also the existence of this financial statement was not disclosed to the Commission in a timely manner during the verification. Contrary to the other financial statements, this ‘third’ version listed explicitly and in detail all subsidies (including their legal basis) that the company had received during the IP. Therefore, an examination of this financial statement would have been very useful during the verification visit in order to countercheck all the information submitted concerning the individual subsidy schemes received by the company.

(86)

The audited financial statements is an essential document for allowing a proper verification of the information provided by the company to the Commission in respect of, amongst others, grants, loans, land-use rights, tax deferrals, etc.

(87)

As outlined above the company's cooperation was not forthcoming and created a serious impediment to a proper verification of the information submitted to the Commission, which could not therefore properly verify the information received concerning, amongst others, the level of subsidies received by the company. As a consequence, the Commission could not reach a reasonably accurate finding, in particular with regard to the level of subsidies received.

(88)

It is considered that the company provided misleading information and failed to cooperate adequately. The Commission therefore decided to apply the provisions of Article 28(1) of the basic anti-subsidy Regulation. Since the company was part of a group the provisions of Article 28(1) of the basic anti-subsidy Regulation was applicable to the entire group.

(89)

However, as for establishing the level of subsidisation for the group, the Commission used the actual data of the two companies within the group that had cooperated fully in both investigations and which information was considered reliable in regard to their levels of subsidisation. Regarding the company within the group, which provided misleading information, the determination of the level of subsidisation was based on facts available. In establishing the level of subsidisation for that legal entity, the facts available used by the Commission were the highest level of subsidisation found for each subsidy scheme for any of the legal entities belonging to the sampled companies or group of companies referred to in recital 30 and which had fully cooperated in the investigation.

(90)

Following disclosure, the complainant claimed that the methodology used for the calculation of the level of subsidisation of the group was not correct. It argued that since the subsidy margin of the group is the sum of the highest subsidy margins found for each subsidy scheme for any of the cooperating companies it should be much higher.

(91)

This claim is based on a misunderstanding. The methodology used for the calculation of the level of subsidisation, described in recital 89 above, was applied only to the company (within the group) which provided misleading information and not to the group as a whole. The claim was therefore rejected.

(92)

The company which provided misleading information was not exporting the product concerned. Within the group, exports of the product concerned were made by one of its related companies. The latter however cooperated fully in both investigations and provided reliable information about the group's export price. Therefore, the submitted information was used for the Commission's definitive findings in that proceeding.

(93)

Following disclosure, the exporting producer claimed that the Commission erred in applying the provisions of Article 28(1) of the basic anti-subsidy regulation.

(94)

First, it was argued that in the letter sent to the company in which the Commission outlined the detailed reasons for the proposed application of the provisions of Article 28(1) of the basic anti-subsidy regulation, it never stated that it could not verify the information concerning subsidies. Therefore the Commission cannot rely on this argumentation in its definitive conclusions as the company had not been given the opportunity to comment on that argument.

(95)

This claim cannot be accepted. The Commission in the letter did state explicitly that it ‘cannot conclude that the information concerning the level of subsidies received by [the company] was verified’. In any event, the company was fully informed of the reasons for applying the best facts available in the final disclosure document and granted the opportunity to comment thereon, which it also did.

(96)

Second, the exporting producer argued that even if the Commission were to apply the provisions of Article 28(1) of the basic anti-subsidy regulation the Commission should not refer to the data of other companies as the basis for determining the level of subsidisation but should rather base itself on the company's actual set of audited financial statements as it is still the ‘most appropriate’ and ‘most suited’ information about the company's level of subsidisation.

(97)

As explained in recitals 83-88 above the Commission has serious doubts as to the credibility of the submitted financial statements and could therefore not rely on those in order to verify the level of subsidisation for different schemes and/or subsidy programmes such as preferential loans and land-use rights at less than adequate remuneration. Indeed, reliable audited financial statements are crucial for verifying the accuracy and completeness of information otherwise provided. Therefore, the Commission had to resort to the best facts available to determine the level of subsidisation, which in this case was verified information on relevant subsidy schemes from other cooperating entities. This claim is therefore rejected.

(98)

The company also claimed that the Commission mistakenly applied international accounting standards (IAS) as a criterion to reject the set of audited financial statements According to the company a distinction should be made between the role of a set of audited financial statements and the relevance of IAS in an assessment of market economy treatment in anti-dumping proceedings, on the one hand, and anti-subsidy proceedings, on the other hand. A violation of IAS cannot constitute a reason to apply the provisions of Article 28(1) of the basic anti-subsidy regulation.

(99)

The Commission notes that the breach of international accounting standards that was discovered during the investigation was not per se the reason for applying the provisions of Article 28(1) of the basic anti-subsidy regulation. The reason was the fact that different versions of the set of audited financial statements were provided to the Commission which cast doubts on their credibility and hence led the Commission to the conclusion that other information regarding the level of subsidisation could not be verified. This claim is therefore rejected.

(100)

The company also claimed that the Commission's methodology of calculating its subsidy margin which consisted in taking the highest countervailing rate for each scheme as found for each cooperating legal entity (and not each group) was unjustified. The company claimed that this methodology is flawed since companies within the same group may decide to concentrate subsidies in one specific entity to the benefit of the entire group.

(101)

As explained in recital 89, in the calculation of the level of subsidisation within the group, the Commission used the actual data of the two other companies within the group that had cooperated in both investigations when calculating the level of subsidisation for the whole group. The facts available applied only to the one legal entity within the group which provided misleading information. In order to determine the level of subsidisation of a legal entity within the group, the Commission found that it was most appropriate to base the calculations at the same level within the corporate structure and take the highest level of subsidisation found for any of the legal entities (within the group if applicable) belonging to the sampled companies or groups of companies. This claim is therefore rejected.

(102)

The Commission did not receive cooperation from any of the State-owned banks in the PRC. They were invited to provide the necessary information for the purposes of the anti-subsidy investigation by completing a questionnaire. Therefore, the Commission notified the government of the PRC that it would consider basing its findings on facts available pursuant to Article 28(1) of the basic anti-subsidy Regulation as far as the information related to the State-owned banks was concerned.

(103)

In the reply to the Commission's letter and subsequently following disclosure, the government of the PRC objected to the application of Article 28(1) of the basic anti-subsidy Regulation as far as the information which was requested from the State-owned banks was concerned. It argued that a large amount of information was provided by the government of the PRC in this investigation. However, the Commission found that that information could not substitute entirely a reply by the State-owned banks to the specific questionnaires. The government of the PRC did not dispute the fact that the state owned banks had not submitted a reply to the questionnaire, neither that the banks were State-owned. Therefore, the Commission had to rely on the facts available for its findings concerning the state owned banks.

(104)

The Commission sent questionnaires to the government of the PRC, which included questionnaires intended for the State-owned banks, and the sampled exporting producers, requesting information on the schemes that allegedly involved the granting of subsidies to the filament glass fibre industry. The following schemes were investigated:

(105)

Findings with regard to State-owned banks were made on the basis of facts available in accordance with Article 28(1) of the basic anti-subsidy Regulation as explained in section C.2.2.

(106)

The following legal provisions provide for preferential lending in the PRC: The Law of the PRC on Commercial Banks (the banking law) [2003], The General Rules on Loans promulgated by the People's Bank of China (PBOC) on 28 June 1996 and Decision No 40 of the of the State Council.

(107)

Whilst the Chinese authorities have provided only limited information concerning shareholding/ownership of banks in the PRC the investigation has, based on facts available, established that the Chinese financial market is characterised by significant government influence and control. When analysing whether banks possess, are vested with or exercise government authority (i.e. they are public bodies) the Commission used all available information concerning not only government ownership of the banks but also other characteristics such as government presence on the board of directors, government influence and control over banks activities, the pursuit of government policies or interests and whether bank entities were created by statute.

(108)

From the available information it is concluded that the fully State-owned banks with a board of directors dominated by the government of the PRC hold the highest market share and are the predominant players in the Chinese financial market. State-owned banks are subject to legal rules which require them, inter alia, to carry out their loan business according to the needs of the national economy, provide credit support to encouraged projects (19) or give priority to the development of high and new technology industries (20).

(109)

Another sign of State involvement in the Chinese financial market is the role played by the PBOC in setting specific limits on the way interest rates are set and fluctuate. (21) Financial institutions are requested to provide loan rates within a certain range of the benchmark loan interest rate of the PBOC. For preferential loans the interest rates are not allowed to float upwards. Limits on the loans interest rates together with the ceilings imposed on deposit rates create a situation in which the banks have guaranteed access to cheap capital (because of the deposit rates regulation) and are able to lend to the selected industries at favourable rates in accordance with the governmental policy of directing banks to act in a particularly supportive manner to certain encouraged and/or high-tech industries, such as the filament fibre glass fibre industry.

(110)

The Commission sought clarifications from the government of the PRC on the definition and wording stated in the Circular 251 as well as to its preceding legislation (Circular of the PBOC concerning expansion of Financial Institution's Loan Interest Rate Float Range — YinFa [2003] No 250). However, as described in Section C.2.2 above, the government of the PRC did not provide these Circulars. The government of PRC claimed however that Circular 250 has been repealed by Circular 251 and that the floor lending rates have been abolished as from July 2013 and therefore there is no State involvement in the banking sector.

(111)

The abolition of the floor lending rates occurred however during the investigation period. Accordingly, the PBOC influenced the setting of interest rates by State-owned banks for the main part of the investigation period. In addition, the investigation did not show any immediate effect from the abolition on the loans received by the sampled producers. In any case the floor on interest rates that existed during the investigation period is not the sole argument as to why the Commission considers State-owned banks as public bodies.

(112)

The findings established in the anti-subsidy investigations concerning Solar Panels (22) and Solar Glass (23), where it was established that State-owned banks in the PRC act as public bodies (see recitals 158 to 168 of the solar panels Regulation and recital 73 of the Solar Glass regulation) are also facts available in this investigation with regard to the public body status of the state owned banks. These facts are summarised as follows:

(113)

On the basis of the above, it is concluded that State-owned banks perform government functions on behalf of the government of the PRC, namely mandatory promotion of certain sectors of the economy in line with state planning and policy documents. The extensive government ownership in the State-owned banks confirms that the banks are controlled by the government in the exercise of their public functions. The government of the PRC exercises meaningful control over State-owned banks through the government's omnipresent involvement in the financial sector and the requirement for State-owned banks to follow government policies. State-owned banks are therefore considered to be public bodies because they possess, are vested with, and exercise, governmental authority.

(114)

Following disclosure the government of the PRC disputed this conclusion stating that the Commission had not set out the reasons why they considered that State-owned banks were public bodies. The Commission is satisfied that the facts set out in the above recitals justify the conclusion that State-owned banks are public bodies.

(115)

While the overwhelming majority of the loans received by the sampled exporting producers are provided by State-owned banks, the investigation revealed that a small amount of loans is provided by privately-owned banks. The Commission therefore analysed whether privately-owned banks in the PRC are entrusted and/or directed by the government of the PRC to provide preferential loans to filament glass fibre producers, within the meaning of Article 3(1)(a)(iv) of the basic anti-subsidy Regulation.

(116)

Article 34 of the banking law states that private banks are also instructed to ‘carry out their loan business upon the needs of national economy and the social development and with the spirit of state industrial policies’ (24).

(117)

The investigation showed that for the sampled exporting producers the interest rates applied by State-owned and private banks were in general at very similar levels. This indicates that State-owned banks, which are the predominant actors on the banking and lending market in the PRC, set the interest rate levels and that private banks are simply following the rates set by State-owned banks (public bodies).

(118)

In these circumstances, it is concluded that private banks do not set their rates independently from State interference and that the lending strategy of the privately owned banks is directed by the government of the PRC.

(119)

Following disclosure the government of the PRC disputed the Commission's interpretation of Article 34 of the banking law, stating that ‘the Commission is reading into Article 34 a meaning which is clearly not attributable to it’. The government of the PRC has drawn the Commission's attention to other articles of the Banking Law, namely Articles 4, 5 and 7, which serve to ensure that loans are made without interference and after a credit assessment.

(120)

The Commission acknowledges that these Articles exist but considers that they should be understood and read in light of the provisions of Article 34. In this respect it is recalled that neither the government of the PRC, nor the banks or the sampled companies concerned were able to demonstrate that loans were made without interference or with a proper credit assessment. On the contrary, the investigation revealed that one of the exporting producers was incurring losses but nevertheless succeeded in receiving loans from banks at normal interest rates without any mark-up for risk related to its difficult financial situation.

(121)

The Commission therefore concludes that privately owned banks are entrusted or directed by the government to provide preferential financing in a similar manner that the one provided by State-owned banks and thus, a financial contribution exists within the meaning of in Article 3(1)(a)(iv) of the basic anti-subsidy Regulation.

(122)

With respect to the banks that provided loans to the cooperating exporting producers, the majority of them are State-owned banks and ultimately controlled by the government of the PRC. These include the major commercial and policy banks in the PRC like the China Development Bank, the EXIM Bank, the Agricultural Bank of China, the Bank of China, the China Construction Bank and the Industrial and Commercial Bank of China.

(123)

Moreover, the Commission notes that the government of the PRC directs preferential lending to a limited number of industries. For instance, Decision No 40 states that the government of the PRC will actively support the development of new materials industries and the filament glass fibre industry is considered as a new material industry. Also, all financial institutions are instructed to provide credit support only to encouraged projects, the category in which the filament glass fibre projects belong. That decision also promises the implementation of ‘other preferential policies on the encouraged projects’.

(124)

The government of the PRC claimed the Commission wrongfully relied on decision 40 since the product concerned is not classified as an encouraged industry. Moreover even if it was accepted that the industry is encouraged the government claimed that the reliance on Decision No 40 cannot extend to an industry which is not listed in Decision No 9 (‘Industrial Restructuring Guidance Catalogue 2011’).

(125)

The sampled exporting producers belong to the categories of encouraged industries as established above (recitals 67-76) as well as to the high and new technology industries. In addition, contrary to the government's claim, special fibre glass and its products as well as furnaces for e-glass production are explicitly listed in Chapter XII point 6 of Decision No 9. (25) The claim is therefore unfounded.

(126)

A benefit exists to the extent that government loans, or loans from private bodies entrusted or directed by the government, are granted on terms more favourable than the recipient could actually obtain on the market.

(127)

The Commission purported to verify the credit risk assessments carried out by the banks that lent money to the sampled exporting producers during the investigation period. Some of the exporting producers were incurring losses. They nevertheless succeeded in receiving loans from banks at the benchmark rate without any mark-up for risk related to their worsening financial situation. Therefore, the Commission has reasons to question whether loans to filament glass fibre companies were based on a diligent risk assessment, and the interest rate set as a result of such an exercise.

(128)

As explained above, since the loans provided by Chinese banks reflect substantial government intervention in the banking sector and do not reflect rates that would be found in a functioning banking market, an appropriate market benchmark has been constructed using the method described below. Furthermore, due to the lack of cooperation by the government of the PRC, the Commission has also resorted to facts available in order to establish an appropriate benchmark interest rate.

(129)

When constructing an appropriate benchmark for RMB denominated loans, it is considered reasonable to apply Chinese interest rates, adjusted to reflect normal market risk. Indeed, in a context where the exporters' current financial state has been established in a distorted market of bank loans and there is no reliable information from the Chinese banks on the measurement of risk and the establishment of credit ratings, it is considered necessary not to take the creditworthiness of the Chinese exporters at face value, but to apply a mark-up to reflect the potential impact of the Chinese distorted market on their financial situation.

(130)

The same situation applies for the loans denominated in foreign currencies. The BB rated corporate bonds with relevant denominations issued during the IP were used as a benchmark.

(131)

As explained above, both the government of the PRC and the cooperating exporting producers were requested to provide information on the lending policies of the Chinese banks and the way loans were attributed to the exporting producers. Such information was however not provided. Accordingly in view of this lack of cooperation, given the totality of facts available, and in line with the provisions of Article 28(6) of the basic anti-subsidy Regulation, it is deemed appropriate to consider that all firms in China would be accorded the highest grade of ‘Non-investment grade’ bonds only (BB at Bloomberg) and apply the appropriate premium expected on bonds issued by firms with this rating to the standard lending rate of the People's Bank of China.

(132)

Therefore to calculate the benchmark interest rate for loans to the sampled companies during the IP, a risk premium was calculated by using the difference between interest rates on bonds issued by companies with BB ratings and bonds issued by companies with AAA ratings (which is the credit rating on bonds issued by the PRC), as recorded by Bloomberg. This risk premium was then added to the published lending rates of the PBOC for BB rated bonds taking into account the duration of the loans.

(133)

The benefit to the exporting producers was then calculated as the difference between the interest actually paid in the IP by the companies and the interest that would have been paid if the benchmark interest rate would have applied to the loans. This benefit was then expressed as a percentage of the total turnover of each cooperating exporting producer.

(134)

Following disclosure the government of the PRC claimed that the Commission should not have referred to any benchmark for the calculation of the benefit as it claimed that loans were granted on market terms and therefore no benefit was conferred.

(135)

As explained in recitals 127-130, the market for bank loans in the PRC is distorted and therefore the Commission considers that resorting to a benchmark is fully justified.

(136)

Moreover the government of the PRC claimed that the Commission's choice of this particular benchmark was not sufficiently reasoned.

(137)

The Commission considers that when constructing an appropriate benchmark for loans, it is considered reasonable to apply Chinese interest rates, adjusted to reflect normal market risk. Indeed, in a context where the exporters' current financial state has been established in a distorted market and there is no reliable information from the Chinese banks on the measurement of risk and the establishment of credit ratings, it is considered necessary to apply a mark-up to reflect the potential impact of the Chinese distorted market on their financial situation.

(138)

On the basis of the findings of the investigation, the Commission concludes that the filament glass fibre industry in the PRC benefited from preferential loans during the IP, both from State-owned banks and from private banks. The financing of the filament glass fibre industry constitutes a subsidy within the meaning of the basic anti-subsidy Regulation as there is

(139)

In view of the existence of a financial contribution, a benefit to the exporting producers and specificity, this subsidy is countervailable.

(140)

Article 6(b) of the basic anti-subsidy Regulation provides that the benefit on preferential loans should be calculated as the difference between the amount of interest paid and the amount that would be paid for a comparable commercial loan which the firm could obtain on the market. As stated, in the absence of any meaningful risk assessment, the Commission established a market benchmark for comparable commercial loans.

(141)

The benefit was calculated for the IP as the difference between the interest actually paid during the IP, and the interest that would have been paid using the benchmark.

(142)

One of the exporting producers claimed that the Commission had used the wrong interest rate actually paid by the company for one loan when calculating the benefit. This claim was accepted and the Commission revised the calculation. The revised calculation had however no effect on the subsidy margin found.

(143)

The subsidy margins calculated for the sampled exporting producers based on this methodology are as follows:

(144)

During the IP, no financial contribution was received by the sampled exporting producers under the remaining preferential lending schemes mentioned in section C.3 above.

(145)

No financial contribution was received by the sampled companies from ‘Famous Brands’, ‘China World Top Brands’ or ‘Funds for Outward Expansion of Industries in Guangdong Province’ programmes during the IP.

(146)

The sampled companies received one-off grants from various government authorities at different levels resulting in the receipt of a benefit during the IP. These grants are considered as falling under the grant programmes allegations in the complaint as the complaint alleged that producers of filament glass fibre received one-off grants from provincial and local government bodies and that these conferred a benefit as the monies were received without adequate consideration.

(147)

The Commission offered consultations with the government of the PRC regarding these specific grants.

(148)

The government of the PRC opposed the consultations claiming that this would not be in line with the Agreement on Subsidies and Countervailing Measures (‘ASCM’) as such consultations should take place prior to the initiation of the investigation and that it would be putting a disproportionate burden on the Chinese authorities to verify the information concerning every single scheme.

(149)

Most of the grants concerned negligible amounts. Therefore, the Commission did not investigate these any further.

(150)

However, the Commission investigated one particular, relatively large grant for the purpose of building dormitories to the company employees that had been provided to one of the sampled companies and is considered linked to the grant programmes allegations in the complaint.

(151)

The ad hoc character of the grant mentioned above clearly demonstrated that it was not available to other companies and was therefore specific as defined in Article 4(2)(a) of the basic anti-subsidy Regulation On the basis of the evidence collected with regard to the receipt of this grant and in the absence of any other information, the Commission consider this grant to be a subsidy within the meaning of Article 3(1)(a)(i) and (2) of the basic anti-subsidy Regulation and a benefit was thereby conferred to the exporting producer concerned.

(152)

Following disclosure, the company that received the grant claimed that the grant was given to the company for renovation of fixed assets, which are amortised in 50 years. Therefore, this subsidy should be allocated over a period of 50 years and only the proportion of 1/50 which corresponds to the benefit received during the IP should be taken into account in the calculation of the subsidy margin.

(153)

The company did not provide any evidence justifying a depreciation period of 50 years for investment in fixed assets, in this case a building used as a dormitory for staff. The actual period of depreciation of a company's fixed assets is normally much shorter and corresponds to a period of 10 to 20 years. On this basis the benefit incurred by this grant is negligible and should therefore not be countervailed.

(154)

The ‘two free, three half’ programme entitles foreign invested enterprises (‘FIEs’) to pay no corporate income tax for the first two years, and to pay only 12,5 % rather than 25 % for the next three years.

(155)

The legal basis of this programme is Article 8 of the Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises (the ‘FIE Tax Law’) and Article 72 of the Rules for the Implementation of the Income Tax Law of the People's Republic of China on Enterprises with Foreign Investment and Foreign Enterprises According to the government of the PRC this programme was terminated under Article 57 of the Enterprise Income Tax Law (‘EIT Law’) of 2008 with a transition period until the end of 2012. The law therefore makes clear that there would be a benefit under this scheme in the tax year 2012.

(156)

This ‘two free, three half’ scheme conferred benefits on companies during the financial year 2012, after which, according to the government of the PRC, the scheme has been withdrawn. In any case, none of the sampled companies is a foreign owned enterprise which could be eligible for this tax scheme during the IP.

(157)

No financial contribution was received by the sampled companies under this programme during the IP. The investigation furthermore established that the scheme has indeed been withdrawn by the government of the PRC.

(158)

This programme allows companies that can show that they meet a certain set of criteria to be recognised as a ‘High and New Technology Enterprise’ to receive a reduction to 15 % on their corporate income tax, as compared to the standard rate of 25 %.

(159)

The legal bases of this programme are Article 28(2) of the Enterprise Income Tax Law of 2008 (‘the EIT law’), along with the ‘Administrative Measures for the Determination of High and New Technology Enterprises’ (Guo Ke Fa Huo [2008] No 172); and Article 93 of the Regulations on the Implementation of Enterprise Income Tax Law, along with the Notice of the State Administration of Taxation on the issues concerning the Payment of Enterprise Income Tax by High and New Technology Enterprises (Guo Shui Han [2008] No 985).

(160)

This scheme applies to High and New Technology Enterprises recognised as such by the government of the PRC. To be eligible for this scheme enterprises shall have core independent intellectual property rights and must meet the following requirements which are set out in the legal basis and summarised as follows:

(161)

Some of the sampled exporting producers were found to be using this scheme, and thereby only paying 15 % corporate income tax rather than 25 %. These companies had applied to be New and High Technology Enterprises and received official notification that they had met the criteria of the scheme and would therefore be entitled to complete their corporate tax returns accordingly.

(162)

The Commission considers that this scheme is a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic anti-subsidy Regulation because there is a financial contribution in the form of revenue foregone by the government of the PRC that confers a benefit to the companies concerned. The benefit for the recipients is equal to the tax saving.

(163)

This subsidy is specific as defined in Article 4(2)(a) of the basic anti-subsidy Regulation since it is limited to the enterprises receiving the certification of High and New Tech Enterprises and complying with all the requirements of the 2008 administrative measures. The sampled exporting producers concerned received such certification. No objective criteria for the eligibility were established by the legislation or the granting authority.

(164)

After disclosure, the government of the PRC challenged the Commission's conclusions, maintaining that the eligibility criteria were objective and apply equally to all companies in the PRC. Therefore they do not fulfil the criterion of specificity.

(165)

The Commission does not accept this claim. The grant is only available to companies with specific characteristics (High and New technology enterprises) and not to all industries and all sectors. Furthermore, eligibility is also not automatic but depends on the grant of a High and New Technology Enterprise certificate, which is released after a discretionary procedure by the competent authority. Therefore the scheme is specific in nature.

(166)

The Commission therefore considers this subsidy as countervailable.

(167)

The Commission has calculated the amount of countervailable subsidy as the difference between the amount of tax normally paid during the IP and the amount of tax actually paid during the IP by the companies concerned.

(168)

This programme allows a company to claim tax credits on the purchase of domestic equipment if a project is consistent with the industrial policies of the Government of the PRC. A tax credit up to 40 % of the purchase price of domestic equipment may apply to the incremental increase in tax liability from the previous year.

(169)

The legal bases of this programme are the Provisional measures on enterprise income tax credit for investment in domestically produced equipment for technology renovation projects of 1 July 1999 and the Notice of the State Administration of Taxation on Stopping the Implementation of the Enterprise Income Tax Deduction and Exemption Policy of the Investments of an Enterprise in Purchasing Home-made Equipment, No 52 [2008] of the State Administration of Taxation, effective 1 January 2008.

(170)

The government of the PRC claimed that this programme has been terminated as from January 2008 according to the mentioned Notice No 52. The investigation has revealed however that one of the sampled companied has benefited from this programme during the IP.

(171)

This programme constitutes a subsidy as it provides a financial contribution in the form of revenue forgone by the government of the PRC according to Article 3(1)(a)(ii) of the basic Regulation. This programme provides a benefit to the recipients for an amount equal to the tax saving in the meaning of Article 3(2) of the basic anti-subsidy Regulation. This subsidy is specific under Article 4(4)(b) of the basic anti-subsidy Regulation since the tax saving is contingent on the use of domestic over imported goods.

(172)

The Commission has calculated the amount of countervailable subsidy as the difference between the amount of tax normally paid during the IP and the amount of tax actually paid during the IP by the companies concerned.

(173)

The subsidy rate established with regard to this subsidy during the IP for the Jiangsu Changhai Group amount to 0,2 %.

(174)

Following disclosure, one exporting producer claimed that it was not eligible for any financial contribution under the scheme ‘Income tax reductions for FIEs purchasing Chinese-made equipment’ as it is not a foreign-invested company. Therefore the Commission erroneously attributed a benefit under this scheme to it on the basis of facts available. It also claimed that minor calculation mistakes were found. Both claims were accepted and the calculation of the subsidy margin was revised accordingly.

(175)

The tax offset for R & D was also investigated. This measure concerned however negligible amounts. Therefore, the Commission did not investigate it any further.

(176)

During the IP, no financial contribution was received by the sampled exporting producers under the remaining tax exemption programmes mentioned in section C.3 above.

(177)

This programme provides an exemption from VAT and import tariffs in favour of FIEs or domestic enterprises for imports of capital equipment used in their production. To benefit from the exemption, the equipment must not fall in a list of non-eligible equipment and the claiming enterprise has to obtain a Certificate of State-Encouraged project issued by the Chinese authorities or by the NDRC in accordance with the relevant investment, tax and customs legislation.

(178)

The legal bases of this programme are Circular of the State Council on Adjusting Tax Policies on Imported Equipment, Guo Fa No 37/1997, Notice of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on the Adjustment of Certain Preferential Import Duty Policies, Announcement of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation [2008] No 43, Notice of the NDRC on the relevant issues concerning the Handling of Confirmation letter on Domestic or Foreign-funded Projects encouraged to develop by the State, No 316 2006 of 22 February 2006 and Catalogue on Non-duty-exemptible Articles of importation for either FIEs or domestic enterprises, 2008.

(179)

All sampled companies benefited from this scheme.

(180)

This programme is considered to provide a financial contribution in the form of revenue forgone by the government of the PRC within the meaning of Article 3(1)(a)(ii) as FIEs and other eligible domestic enterprises are relieved from payment of VAT and/or tariffs which would be otherwise due. It therefore confers a benefit on the recipient companies in the sense of Article 3(2) of the basic anti-subsidy Regulation. The programme is specific within the meaning of Article 4(2)(a) of the basic anti-subsidy Regulation since the legislation pursuant to which the granting authority operates limits its access to enterprises that invest under specific business categories defined exhaustively by law and belonging either to the encouraged category or the restricted category B under the Catalogue for the guidance of industries for foreign investment and technology transfer or those which are in line with the Catalogue of key industries, products and technologies the development of which is encouraged by the State.

(181)

Following disclosure the government of the PRC challenged the Commission's conclusions, maintaining that the eligibility criteria were objective and apply equally to all companies in the PRC. Therefore they do not fulfil the criterion of specificity. The government of the PRC did not however point to any particular provisions in the legislation substantiating its views and did not provide any conclusive evidence that eligibility is automatic.

(182)

The Government of the PRC as well as one of the exporting producers also claimed that the Commission cannot countervail any possible VAT benefits that may have been received by the three sampled companies as VAT exemptions granted in the past could no longer be availed of with effect from the year 2009. Therefore, even assuming the 5 to 10-year average depreciation period for the imported equipment in question, the alleged benefit would either expire prior to the imposition of the measures or be unlikely to continue during the full five-year period of the measures.

(183)

The Commission notes that the depreciation period of some of the imported equipment is much longer than 10 years and could last 15 or 20 years in some cases. In any event, the Commission did not countervail any benefit arriving from any of the purchases after 2009 of imported equipment. Moreover, the government of the PRC acknowledges that the companies could still benefit from the scheme ‘slightly afterwards’ from the imposition of the measures. This argument is therefore rejected.

(184)

The amount of countervailable subsidy is calculated in terms of the benefit conferred on the recipients, which is found to exist during the IP. The benefit conferred on the recipients is considered to be the amount of VAT and duties exempted on imported equipment. In order to ensure that the countervailable amount only covered the IP period the benefit received was amortized over the life of the equipment according the exporting producer's normal accounting procedures.

(185)

The subsidy rate established with regard to this scheme during the IP for the sampled exporting producers amounts to:

(186)

No financial contribution was received by the sampled exporting producers from the remaining indirect tax exemption programmes mentioned in section C.3 above during the IP.

(187)

No subsidies were found to be linked to the purchase of raw materials, water or electricity by the sampled exporting producers during the IP.

(188)

Companies are not allowed to purchase land outright in the PRC, but only purchase a land use right from local authorities.

(189)

The Land Administration Law of the PRC states that all land belongs to the people, and cannot be bought or sold, but sets out the conditions by which land use rights can be sold to businesses by bidding, quotation or auction.

(190)

In principle a system of auction would allow the market to judge the price of a particular land use right, and therefore the price would be set independently. However, the government of the PRC stated that in any case they set floor prices for each grade of land (land is graded from 1 to 15 based on the quality of the land parcel) below which the price for the land use right cannot fall.

(191)

The government of the PRC also controls the supply of land, by restricting by quota the area of land for which land use rights can be sold for industrial or residential purposes, by province and by year.

(192)

In any case, for each and every land use right purchase by the sampled exporting producers, the Commission found no evidence of an auction process that independently set the price of the land use right. The exporting producer awarded the land bid the starting price, and, as it was the only bidder, it was awarded the land use right. Following disclosure the Government of the PRC stated that it disagrees with the Commission's findings that there is no functioning market for the sale of land use right in the PRC. It however did not provide any new arguments to support this view.

(193)

The findings of the investigation confirm that the situation concerning land provision and acquisition in the PRC is unclear and non-transparent and the prices are often arbitrarily set by the authorities. The authorities set the prices according to the Urban Land Evaluation System which instructs them among other criteria to consider also industrial policy when setting the price of industrial land (29).

(194)

Also, the independent publicly available information suggests that the land in the PRC is provided for below the normal market rates (30).

(195)

In effect therefore the sampled companies paid the price set by the government of the PRC. The land use right is provided at less than adequate remuneration when compared to a market benchmark, which is set out in section (e) below.

(196)

The situation concerning land in the PRC is also discussed in the IMF Working Paper which confirms that the provision of land use rights to Chinese industries does not respect market conditions (31).

(197)

The Commission concludes that the provision of land use rights by the government of the PRC should be considered a subsidy within the meaning of Article 3(1)(a)(iii) and Article 3(2) of the basic anti-subsidy Regulation in the form of provision of goods conferring a benefit upon the companies. As the investigation did not reveal the existence of a functioning market for the sale of land use rights in the PRC the use of an external benchmark (see section (e) below) demonstrates that the amount paid for land use rights by the sampled exporters is below the market rate.

(198)

The subsidy is specific under Article 4(2)(a) and 4(2)(c) of the basic anti-subsidy Regulation because Decision No 40 of the State Council requires that public authorities ensure that land is provided to encouraged industries, of which filament glass fibre is one as explained in details in recitals 67 to 82. Article 18 of Decision No 40 makes clear that industries that are ‘restricted’ will not have access to land use rights.

(199)

The benefit is the difference between the price paid for the land use right, and an appropriate external benchmark.

(200)

The Commission considers Chinese Taipei as a suitable external benchmark for the following reasons:

(201)

Following disclosure the Government of the PRC disputed the use of Chinese Taipei as a benchmark claiming that the population density in Chinese Taipei is many times higher than in the PRC which makes the land situation and prices in the two countries not comparable. The Commission considers however that for the many reasons spelled out in the previous recital the benchmark has been selected on a reasonable basis.

(202)

Moreover following disclosure one of the sampled exporting producers suggested that the use of Chinese Taipei was not suited to the economic conditions in the particular province in which they were located, but did not suggest an alternative. It also claimed that physical proximity between the PRC and Taipei should not be considered as a valid criterion for the selection of this particular benchmark but failed to substantiate its claim. Given the lack of alternative benchmark suggestions, the use of Chinese Taipei is confirmed.

(203)

Taking all these factors into account, the Commission concluded that land use right prices in the PRC, if market conditions prevailed, for the sampled exporting producers, would be very similar to land prices in Chinese Taipei.

(204)

Average land prices in Chinese Taipei for 2012 were taken from the Industrial Bureau of the Ministry of Economic Affairs and adjusted backwards for inflation and GDP growth to fix a benchmark price for land in each calendar year. As land use rights are valid for 50 years and depreciated on this basis, the benefit in the IP will be 1/50 of the difference between the benchmark price and the actual price paid.

(205)

The subsidy rate established for provision of land at less than adequate remuneration is as follows:

(206)

The Commission calculated the amount of countervailable subsidies in accordance with the provisions of the basic anti-subsidy Regulation for the investigated companies scheme by scheme, and added these figures together to calculate a total subsidy amount for each exporting producer for the IP.

(207)

To calculate the overall subsidy margins below, the Commission first calculated the percentage subsidisation, being the subsidy amount over total company's turnover. This percentage was then used to calculate the subsidy allocated to exports of the product concerned to the Union during the IP.

(208)

The subsidy amount per tonne of product concerned exported to the Union during the IP was then calculated, and the margins below calculated as a percentage of the Costs, Insurance and Freight (‘CIF’) value of the same exports per tonne.

(209)

In accordance with Article 15(3) of the basic anti-subsidy Regulation, the total subsidy margin for the cooperating companies not included in the sample is calculated on the basis of the total weighted average subsidy margin established for the cooperating exporting producers in the sample with the exclusion of the Group to which the exporting producer subject to the provisions of Article 28(1) belongs.

(210)

The like product was manufactured by eight producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic anti-dumping Regulation and Article 9(1) of the basic anti-subsidy Regulation.

(211)

The total Union production during the investigation period was established between 530 000 and 580 000 tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry as provided by APFE. As indicated in recital 17, manufacturing plants of three Union producers were selected in the sample representing 52 % of the total Union production of the like product.

(212)

On the basis of the information included in the complaint/request for review where the actual macroeconomic indicators of the complainants/applicants were disclosed, and the fact that only a very limited number of Union producers did not form part of the complainants/applicants, it appears appropriate not to disclose the actual aggregated macroeconomic indicators related to all of the Union producers since it would be feasible for any interested party to discern the missing company-specific figures of the non-complainants/applicants.

(213)

Following the definitive disclosure, the government of the PRC objected to the confidential treatment and the provision of ranges for the total Union consumption and the other macroeconomic injury indicator data.

(214)

Following the request to do so and when a good cause was given, the Commission has the obligation to respect the confidential data of the producers which were not the complainants. The disclosure of the precise macroeconomic indicators would allow identifying confidential data of such producers and would harm their interests. The claim is therefore rejected.

(215)

The Commission established the Union consumption on the basis of (i) the volume of sales of the Union industry on the Union market based on data provided by APFE and (ii) imports from third countries based on data extracted from Eurostat (Comext).

(216)

Union consumption developed as follows:

Table 1

Union consumption (metric tonnes)

(217)

Between 2010 and the IP, the Union consumption increased by 3 %.

(218)

Following the definitive disclosure, one user claimed that the union consumption dropped almost 30 % in 2009. In that perspective, they claim that a 3 % increase from 2010 is not significant. However, the Commission did not qualify this increase as significant but noted that consumption increased over the period considered.

(219)

The below analysis encompasses both the dumped and the subsidised imports following the identical sampled producers in the PRC and the identical IP period.

(220)

The volume of the imports from the PRC of the product concerned developed as follows:

Table 2

Import volume (metric tonnes), market share

(221)

The volume of imports from the PRC decreased by 14 % over the period considered and their market share by 17 %. However, 2010 is not a suitable reference year and import trends would be more accurately analysed when also looking at the preceding year 2009, as shown in the table above. 2010 was characterised by significant Union importers' stockpiling of Chinese filament glass fibre products prior to the imposition of the provisional duties in September 2010. Indeed the investigation revealed that during the first nine months of 2010 much larger quantities than usual were imported from the PRC. Imports from the PRC amounted to around 99 000 tonnes in 2009, whereas in 2010 they were above 152 000 tonnes and then dropped in 2011 to around 109 000 tonnes. The trend shows a clear increase in imports from 2009 onwards. As from 2011 Chinese imports increased by 20 % in volume terms which resulted in regained market share of 2 percentage points.

(222)

Several parties reiterated their claims that imports from the PRC and its market share decreased between 2010 and the end of the IP, and that therefore no significant increase in imports has been demonstrated as required by Article 3(2) of the ADA and Article 15(2) of the ASCM. Furthermore, they claim that 2009 is not an appropriate reference year for the following reasons: i) there is no legal basis in the anti-dumping and anti-subsidy basic Regulation and the Mexico-Steel Pipes and Tubes Panel held that ‘an investigating authority is precluded from using temporal subsets within a period’, ii) there is no evidence for the claim that the imports in 2010 were the result of stockpiling and iii) 2009 data has not been considered for any other aspect of the injury assessment, which rendered the assessment therefore not objective.

(223)

As to the first and the third claim, the basic anti-dumping Regulation and basic anti-subsidy Regulation, being the applicable law, do not detail which period should be considered in order to analyse trends. Therefore there is no reason why the year 2009 could not be considered in order to analyse the trends of the imports from the PRC. This does not make the analysis un-objective, on the contrary, it further completes the analysis made with regards to the situation of the Union industry. Only with regard to the specific injury indicators related to the Chinese imports, the year 2009 was taken into consideration in addition to the period considered as explained above in 219. For the other injury indicators, there was no objective reason why not all years of the period considered could be fully taken into account.

(224)

As to the second claim, the stockpiling effect is shown very clearly in the monthly import data obtained from the database as set up in line with Article 14.6 of the basic anti-dumping Regulation (see graph 1 below) (34). Prior to the imposition of provisional measures, imports of the product concerned from the PRC strongly increased in the second and third quarter of 2010 (for consumption before the end of 2010/beginning of 2011 due to the limited shelf life). This did not correspond to a similar increase in consumption, which indicates that these imports were made with the purpose of stockpiling in anticipation of the measures to be imposed. The government of the PRC did not provide another explanation for this increase and therefore the Commission can reasonably consider that stockpiling took place prior to the imposition of provisional measures at the end of 2010. This is further demonstrated by the fact that the level of monthly imports of the PRC in the period between the provisional and definitive measures (fourth quarter of 2010 and first trimester of 2011) was very low. When the measures were lowered at the definitive stage (in March 2011), the monthly import levels increased again to a stable level.

Graph 1

Imports of the product concerned from the PRC (Monthly quantity)

Source: Article 14(6) database

(225)

Chinese import prices (excluding anti-dumping duties in force) developed as follows:

Table 3

Import prices

(226)

The Chinese CIF import prices (excluding anti-dumping duties in force) evolved from 911 EUR/tonne to 834 EUR/tonne during the period considered. This represents a 8 % decrease over the period considered.

(227)

The government of the PRC and a user claimed that a comparison of average import prices in the absence of an analysis of the product mix was misleading. The government of the PRC further stated that the majority of the imports from the PRC consisted of the cheapest product type, that is to say rovings.

(228)

Contrary to the claim, the product mix was fully taken into account in the analysis as the Commission compared the selling prices of the Chinese exporting producers with those of the sampled Union producers per product type. The same approach was used in the original investigation.

(229)

Following the definitive disclosure, the government of the PRC requested Chinese import prices per product type in table 3, given that data per product type was used for the undercutting and injury margin calculations.

(230)

The average Chinese import price from table 3 is used to demonstrate the trend over the period considered. For this purpose of showing trends, the use of average prices is appropriate. For the determination of the undercutting and injury margin calculations, data per product type was used.

(231)

In order to determine price undercutting during the IP, the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level, were compared to the corresponding weighted average prices per product type of the imports from the sampled Chinese producers to the first independent customer on the Union market, established on a CIF basis, with appropriate adjustments for customs duties, anti-dumping duties and post-importation costs. The price comparison was made on a type-by-type basis for transactions at the same level of trade. The result of the comparison was expressed as a percentage of the sampled Union producers weighted average ex-works price during the investigation period. It showed for a major Chinese exporter to the Union an undercutting margin of 2 % despite the current anti-dumping measures (and custom duties) that were added to the import price. The vast majority of other imports were made at price levels comparable to Union prices.

(232)

Following the definitive disclosure, one exporting producer claimed that there were some inaccuracies with the CIF values of 3 PCN's.

(233)

The claim was correct and the Commission has adjusted the respective CIF values which led to a small change in the undercutting and underselling margins for this exporting producer (see recital 440).

(234)

Several parties claimed that there was no significant price undercutting during the IP. They stated that an undercutting margin of 2 % for a single exporter is almost a de minimis one and cannot be considered as significant. In addition, they refer to Commission practice where limited price undercutting or price undercutting of 6 % was held to have no effect on the general price level in the Union due to the limited volume of exports.

(235)

Despite the current anti-dumping duties, there is still undercutting. The reference to Commission practice is misleading. In the case of ‘dense sodium carbonate’ (35), the 6 % price undercutting was held to have had practically no effect on general price levels because of the limited volume of imports combined with a market share of 1,4 % by the exporting country. In comparison, the market share of the PRC in the IP is between 15 % and 20 %. The ‘certain laser optical reading systems’ (36) case referred to limited price undercutting for the imports concerned in view of (i) major increase in the Union consumption (129 %) and (ii) the nature of the product concerned, a non-homogeneous product with a great variety of features and technical differences and subject to rapid technological development. In the current investigations, the market of the product concerned is of a totally different nature and hence the magnitude of the price undercutting has to be considered in that particular market context. The product concerned is a basic homogeneous reinforcement product in a market which is rather stable. Such a market is more sensitive to price differences and even a smaller price difference can have a major impact on the market. The fact that no major undercutting took place does therefore not change the Commission's conclusions. On the contrary, this element was fully taken into account in the assessment. In any event, each case is assessed on its own merits and the injury picture consists of many indicators and none can have a decisive importance.

(236)

In accordance with Article 3(5) of the basic anti-dumping Regulation and Article 8(4) of the basic anti-subsidy Regulation, the examination of the impact of the dumped and subsidised imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(237)

As mentioned in recitals 17 to 25, sampling was used for the determination of possible injury suffered by the Union industry.

(238)

For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data provided in the complaint and in the review request as well as in subsequent submissions and cross-checked where possible with statistics. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

(239)

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

(240)

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

(241)

A variation in yearly production is common to the Union industry given that the furnaces have to be rebuilt every 7 to 10 years, which creates a higher production volume in the previous year to build stock, and a lower production volume in the year when the furnace is out of order for the rebuild. Whenever a furnace is out of order for a rebuild, the production capacity of that given year will also be lower.

(242)

Bearing in mind these caveats, the total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 4

Production, production capacity and capacity utilisation

(243)

In the context of increasing Union consumption (by 3 %), the Union industry's production of the like product decreased between 2010 and the IP by 5 %. The production capacity also decreased between 2010 and the IP, in the region of 4 %. The capacity utilisation stayed fairly stable over the period considered with the exception of a drop in 2012.

(244)

A production drop by 11 percentage points and a production capacity drop by 4 percentage points can be noted between 2011 and 2012. This was the result of the restructuring of the Union industry and the closure of some of its plants. The filament glass fibre producer Ahlstrom ceased production at the end of 2011 and the Owens Corning Vado Ligure plant in Italy closed its plant in 2012 as they were not able to recover from the dumped imports. The Union Industry believes however that after restructuring and once a level playing is re-established, it can remain a viable industry, which explains why the Union industry still invests in rebuilding the existing furnaces.

(245)

Following the definitive disclosure, the government of the PRC claimed that the Commission referred to a shorter than average lifespan for the furnaces and that there are therefore considerable inefficiencies in the Union producers' investments and/or usage of the furnaces.

(246)

It was demonstrated that furnace rebuilding decisions by the Union industry were taken based on production and energy efficiency considerations. There were no indications that the lifespan of the furnace as applied by the sampled Union producers, was not a good practice in the industry and in line with the requirements of the product mix.

(247)

Several parties claimed that a longer period than 2010 till the IP has to be considered specifically because of the furnace rebuilt costs, which would affect all the macro- and micro economic indicators. The government of the PRC stated that no data or information was given on the years in which the Union producers undertook furnace rebuilds.

(248)

Furnace rebuilds are inherent to the industry and recurrent. They are essential to ensure the continuity of the operations and to maintain the capacity. R & D investments made are directly linked to the operational capacity and to enable to develop tailor made products for the client's needs. Therefore, these investments are not exceptional to the period considered. Whatever the timespan considered, there will always be effects of furnace repairs or rebuilds on the production volume. Company specific information when rebuilds have taken place is considered confidential.

(249)

One user also claimed that the Union industry was able to avoid any damaging effect (of subsidised and dumped imports) as the capacity utilisation stayed fairly stable over the period from 2010 till the end of the IP.

(250)

The production of the like product is a continuous process which cannot be adapted to short term fluctuations in demand. The fairly stable capacity utilisation has to be seen in the light of a declining production capacity. Therefore, the claim is rejected.

(251)

The free market sales volumes of the Union industry on the Union market as well as the captive market sales volumes on the Union market and the respective market shares developed over the period considered as follows:

Table 5

Sales volume and market share