On 7 September 2017, the Commission published a Notice in the Official Journal of the European Union concerning the judgment of 1 June 2017 in case T-442/12. The Commission decided to reopen the anti-dumping investigation concerning imports of tartaric acid originating in the PRC that led to the adoption of Regulation (EU) No 626/2012, in so far as it concerns the exporting producer concerned, and resumed it at the point at which the irregularity occurred. That reopening was limited in scope to the implementation of the judgment of the General Court with regard to Changmao Biochemical Engineering Co. Ltd. The reopening did not affect other investigations.

The request for review was lodged on 24 January 2017 by Distillerie Bonollo S.r.l., Caviro Distillerie S.r.l., Industria Chimica Valenzana SpA, Alvinesa Alcoholera Vinícola SA, and Comercial Química Sarasa SL (‘the applicants’), representing more than 25 % of the total Union production of tartaric acid.

The request was based on the grounds that the expiry of the measures imposed on imports of tartaric acid originating in China would be likely to result in a continuation or recurrence of dumping and continuation or recurrence of injury to the Union industry.

The product under review is tartaric acid, excluding D-(-)- tartaric acid with a negative optical rotation of at least 12,0 degrees, measured in a water solution according to the method described in the European Pharmacopoeia, originating in the PRC, currently falling within CN code ex 2918 12 00 (TARIC code 2918 12 00 90) (‘the product under review’).

The product under review is used in wine, in beverage and food additives, as a retardant in plaster and in numerous other products. It can be obtained either from the by-products of winemaking, as is the case with production in the Union (‘natural production’) or via chemical synthesis from petrochemical compounds, as is the case with production in the PRC (‘synthetic production’). Only L+ tartaric acid is manufactured from the by-products of winemaking. Synthetic production allows the manufacture of both L+ and DL tartaric acid. Both types are the product under review and have overlapping uses.

• the product produced and sold by the exporting producers on the domestic market of the PRC,

• the product produced and sold in the analogue country,

• the product produced and sold in the Union by the Union industry,

have the same basic physical and chemical characteristics, and the same basic uses. They were therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

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

Exports by Hangzhou Bioking were excluded from the analysis of the likelihood of continuation or recurrence of dumping pursuant to Implementing Regulation (EU) No 332/2012 mentioned in recital (2). The analysis below was solely based on exports of the product under review by exporters/producers subject to the measures.

As mentioned above in recital (27), none of the Chinese exporters/producers cooperated in the investigation. Therefore, the Commission informed the Chinese authorities that due to the absence of cooperation of any Chinese exporter/producer, the Commission may apply Article 18 of the basic Regulation concerning the findings with regard to the PRC. The Commission did not receive any comments or requests for an intervention of the Hearing Officer from the Chinese authorities in this regard.

1. (i)

   information contained in the request;

2. (ii)

   data reported to the Commission by the Member States pursuant to Article 14(6) of the basic Regulation (the ‘14(6) database’);

3. (iii)

   statistics of the Chinese Export Statistics Database (‘Chinese database’);

4. (iv)

   Global Trade Atlas (‘GTA’) database;

5. (v)

   publicly available information such as corporate websites and excerpts of publications from market intelligence firms available on internet;

6. (vi)
   information collected during previous investigations14.

In the Notice of initiation, the Commission informed interested parties that it envisaged Argentina as a market economy third country (‘analogue country’) within the meaning of Article 2(7)(a) of the basic Regulation and invited them to comment on this choice. No comments were received in this respect.

The Commission contacted the Argentinian authorities and the two known producers of the product under review in Argentina and invited them to cooperate. It was found that one Argentinian producer ceased to produce the product under review during the RIP and the other declined to cooperate.

In parallel, the Commission sought cooperation of eight known producers and two producers' associations in other potential analogue countries (Australia, Brazil, Chile and India) and also contacted the relevant authorities in these countries inviting them to provide the contact information of producers' associations and producers known to produce and sell the product under review on their market.

One Australian producer first agreed to cooperate but finally submitted a deficient reply that did not contain any quantitative data and had to be disregarded.

No other producer in any potential analogue country came forward.

In the absence of cooperation from any analogue country producer, the Commission determined the normal value on any other reasonable basis, in accordance with Article 2(7)(a) of the basic Regulation.

The investigation established that the product under review in Argentina was produced by using the natural process, while in China the cheaper synthetic process was used. The cost of the raw materials used in Argentina was therefore adjusted to take into account the cost differences in production methods.

After disclosure, one Chinese exporting producer claimed that the analogue country methodology applied in the present review was inconsistent with the EU's obligations under the World Trade Organisation (‘WTO’). In particular, it referred to the expiry of Section 15 of the Protocol of Accession of the People's Republic of China to the WTO on 11 December 2016, after which the analogue country methodology was no longer warranted.

The Commission recalled that in line with Article 2(7) of the applicable basic Regulation, normal value was determined on the basis of data from the analogue country. This claim was therefore rejected.

Further to the findings of dumping during the RIP, the Commission analysed whether there was a likelihood of a continuation of dumping should the measures be repealed. The following elements were analysed: the production and spare capacity in China, the Chinese export behaviour in other third countries and the attractiveness of the Union market.

Given the non-cooperation of the Chinese exporting producers, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of recurrence of dumping set out below were based on facts available, namely the sources mentioned in recital (35).

As already set out in recital (33) the analysis of likelihood of continuation of dumping was based on data exclusively relating to ‘producers subject to measures’ i.e. all Chinese producers except Hangzhou Bioking.

During the RIP, the like product was produced by nine producers in the Union. Of these nine producers, seven producers cooperated with the investigation. These seven producers were found to account for a major proportion, in this case more than 60 % of the total Union production of the like product. They are hereafter referred to as the ‘Union industry’ within the meaning of Article 4(1) and Article 5(4) of the basic Regulation.

For the purpose of the injury analysis, the injury indicators were assessed at the level of major proportion of the Union production, on the basis of verified information collected from the producers that cooperated with the investigation.

The Union market for the product under review is characterised by a relatively small number of producers, mostly small and medium enterprises. With the exception of one producer which only produces TA, all other producers are vertically integrated, their main activity being producing alcohol from wine lees, a process for which the product under review is a by-product.

The period considered of the current investigation partially overlaps with the one of the investigation referred to in the recital (5) for the year 2013 and partly for 2014. As mentioned in the recital (96), the injury aspects in the investigation at hand were assessed at the level of major proportion of the Union production, on the basis of verified information collected from the cooperating Union producers. In the investigation referred to in the recital (5), the macroeconomic injury indicators such as production and sales volume and market share were assessed based on data from all Union producers. Therefore, the values for some indicators differ between this investigation and the investigation referred to in recital (5).

Union consumption was established on the basis of the sales volumes of the Union industry on the Union market, the import volumes from third countries into the Union based on the 14(6) database, Chinese imports based on the 14(6) database and the sales volume of other Union producers, based on information provided in the expiry review request.

Imports from third countries were at very low levels and virtually ceased during the RIP. They dropped from 250 tonnes in 2013 to practically zero in the RIP. Prices of these imports were above the prices from imports of China. They were below the average price level of the Union industry in 2013 and 2014. In 2015, the quantity imported was very low (9 tonnes) and in the RIP it was virtually zero. Therefore, the resulting average prices for these years were not considered representative or meaningful. In any event, exports from third countries were marginal since during the whole period considered they represented only a market share of 1 % or less.

Pursuant to Article 3(5) of the basic Regulation, the Commission examined all relevant economic factors and indices having a bearing of the state of the Union industry.

As set out in recitals (94), this assessment was based on a major proportion of the Union production, on the basis of data provided by the cooperating Union producers.

The production capacity of the Union industry increased by 6 % throughout the period considered. This increase was mainly attributable to an investment made by one Union producer in 2015.

The increase of total sales was less pronounced than the increase of sales volume from the Union industry. Sales volume established on this basis as compared to the previous expiry review investigation mentioned in recital (3) has decreased. Thus, between 2010 (which was the RIP of the previous expiry review investigation) and 2013 sales volumes decreased by [25 - 35 %] from 20 623 tonnes in 2010 to [13 500 - 15 500 tonnes] in 2013. Therefore, despite the increase in sales volume observed during the period considered of the present investigation, sales volumes in the RIP remained below the average sales volumes during the previous review investigation.

Between 2013 and the RIP, whilst the Union consumption decreased by 11 %, the volume of sales by the Union industry on the Union market increased and their market share increased by 14 percentage points.

Substantial level of dumping was found in this investigation. Although the Union industry showed a positive development regarding sales volumes and market shares during the period considered, the financial indicators, as set out in recitals (126) to (137) deteriorated. Therefore, it was considered that the Union industry has not fully recovered from the effects of dumped imports. It is recalled that in the original investigation, dumping margins of 4,7 % and 10,1 % were found for the two Chinese exporting producers that were granted individual duty rates. The dumping margin for all other companies was set at 34,9 %. In addition, as stated in recitals (74) to (93) above, a likelihood of continuation of dumping was established mainly based on available excess production capacity in China, the price behaviour of the Chinese exporters on the markets and the attractiveness of the Union market. Therefore, it is considered that the Union industry remains vulnerable to the injurious effects of any dumped imports in the Union market.

The average sales prices of the Union industry on the Union market to unrelated customers decreased by 47 % between 2013 and 2015 and remained on that level during the RIP. In absolute terms, sales prices decreased from 5 239 EUR/tonne in 2013 to 2 761 EUR/tonne in RIP.

The availability of calcium tartrate, which is produced out of wine lees and represents most of total costs of manufacturing of TA, varies according to the quality of the grape wine harvest. Therefore, favourable or poor climatic conditions have an effect on the overall supply of calcium tartrate and its sales prices, which in turn has an impact on the annual averages sales prices. Thus, the Union prices observed in 2013 have been exceptionally high considering the long term trends. Also, the years from 2014 to RIP have been better wine harvesting years in the Union and the annual average sale prices have been lower. It should also be noted that as mentioned in the recital (100), the climatic/harvest-related conditions play a role not only for the supply of calcium tartrate but also for the demand of the product under review within the wine producing industry. Thus there is an element of variability in the prices and cost of production of tartaric acid which was also observed during the period considered.

During the period considered, the Union industry's average labour costs per employee decreased by 4 %.

Profitability of the Union industry was established by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. During the period considered, the profitability of the Union industry's sales of the like product on the Union market to unrelated customers decreased from 7,1 % close to zero (0,8 %), which corresponds to an overall decrease of 88 %. This is in line with the fact that the selling prices decreased more rapidly than the cost of production. Profitability thus dropped most significantly between 2013 and 2014 when the Union industry realised losses of – 1,2 %. The losses increased in 2015 reaching – 4,0 %. During the RIP, profitability increased again and reached slightly positive levels. This positive development correlates with increases of production, capacity utilisation rate and productivity, which contributed to the decrease of cost of production per tonne. While the average sales prices remained constant, this helped to improve the profitability between 2015 and RIP. During the whole period considered, the profitability was below the 8 % target profit for this industry.

The net cash flow is the ability of the Union producers to self-finance their activities. In line with deteriorated profitability the cash flow decreased by 98 % during the period considered: it dropped 75 % in 2014 and became negative in 2015. During the RIP it was only marginally above zero.

The Union industry's investments in the production of the like product increased overall by 133 % during the period considered. This is due to some major investments especially during 2015 and RIP. However, these investments were made by only few companies. The biggest individual investment which represented over 50 % of total investments made in 2015 was linked to relocation of activities.

The return on investments is the profit in percentage of the net book value of investments. In line with the decreased profitability, it became negative in 2014 and 2015 and was only 0,1 % during RIP. The overall return on investments was weak over the whole period considered.

The weakening of the cash flow has reduced the ability of the Union industry to raise capital through internally generated funds. Consequently, the ability to raise capital had deteriorated from the previous expiry review. However, there were no indications that this had an impact on the ability to continue business activities or carry out investments.

Injury indicators such as production, sales volume and market share showed positive trends during the period considered. However, these trends did not have a positive impact on the overall financial situation of the Union industry. To the contrary, the Union industry's profitability showed a strong negative trend during the period considered and the industry was even loss-making in 2014 and 2015. During the RIP, the Union industry was only slightly above break-even. Moreover, other financial indicators such as cash flow and return on investment also deteriorated and showed negative values during the period considered.

As mentioned in recital (2), the current anti-dumping duties were in place on imports of tartaric acid from the PRC, except from Hangzhou Bioking. Nevertheless, the Union industry suffered from the effects of the dumped imports from the PRC. In particular, there was significant price pressure from the dumped imports undercutting the Union industry prices by 19 % despite the anti-dumping duties in place. Due to this price pressure, the Union industry was unable to keep its prices above the production cost. This had a negative impact on the situation of the Union industry, as demonstrated by the decrease in sales prices and profitability as well as other financial injury indicators. Thus, despite the increase of sales volume and market share of the Union industry, the profitability deteriorated during the period considered (although increasing again in the RIP, it only reached levels slightly above break-even), as well as cash flow and return of investments. On this basis, it was established that the existing measures were not fully achieving the intended effects and that the Union industry remains vulnerable to the injurious effects of dumped imports in the Union market.

Following disclosure, one Chinese exporting producer made the several claims as regards the injury analysis:

First, this party considered certain injury indicators unreliable on the grounds of differences between the indicators in this investigation and in the investigation mentioned in recital (5). This party referred in particular to the Union consumption, inventories and the Union industry's profitability. It was claimed that the Commission did not sufficiently explain these differences and alleged that using a different set of data would have led to different conclusions on injury.

In this respect, it is noted that the reason for the differences of data is set out in recitals (94) to (98). Thus, in the investigation referred to in the recital (5), the macroeconomic injury indicators such as production and sales volume as well as market share were assessed based on data from all Union producers whereas the current investigation assessed these indicators on the basis of a major proportion of the Union industry. Therefore, the values for some indicators differ between these investigations. This party did not provide further elements to support its claim. Therefore, the claim is rejected.

Second, the same party claimed that certain indicators such as sales volume, market share, production volume, production capacity and utilization, employment, productivity, labour cost, cash flow and investment showed positive trends. Therefore, it could not be concluded that the Union industry suffered material injury. In this respect, first, the Commission did not find that the Union industry suffered material injury, but merely considered that it remained vulnerable to the injurious effects of dumped imports in the Union market, and, second as mentioned in recital (138) the positive trends in certain indicators did not have a positive impact on the overall financial situation of the Union industry. Therefore, this claim is rejected.

Third, it was claimed that the injury could not be caused by the imports subject to measures. One party claimed that other possible factors allegedly causing injury to the Union industry were the decrease in consumption and the investments made by the Union industry. This party also claimed that a separate analysis should have been made for tartaric acid obtained from natural production on the one hand and tartaric acid obtained from synthetic production on the other hand. In this respect, it should be pointed out that the investigation did not reveal that the Union industry suffered material injury. The Commission merely considered that it remained vulnerable to the injurious effects of dumped imports in the Union market. Accordingly, the Commission analysed whether there is a likelihood of recurrence of injury in accordance with Article 11(2) of the basic Regulation. Therefore, the above claims were rejected.

In summary, none of the above claims could devaluate the findings and conclusions as described in recital (139), which are hereby confirmed.

The investigation showed that Chinese imports were made at dumped price levels during the review investigation period and that there was a likelihood of continuation of dumping should the measures be allowed to lapse.

During the period considered, the Union industry was in a vulnerable situation, still exposed to the injurious effect of the dumped imports from the PRC.

In accordance with Article 11(2) of the basic Regulation, it was therefore assessed whether there would be a likelihood of recurrence of injury should measures against China be allowed to lapse in accordance with Article 11(2) of the basic Regulation.

To establish the likelihood of recurrence of injury, the following elements were analysed: the production and spare capacities in China, the attractiveness of the Union market, the expected price level of Chinese imports into the Union market and the foreseen impact on the Union industry.

The total production capacity of Chinese producers subject to the measures was 54 000 tons, while spare capacity amounted to between 24 000 and 28 000 tons. The spare capacity was between 6 % to 24 % higher than the total Union consumption during the RIP.

It should also be noted that there are no significant constraints in production volumes for Chinese production given their synthetic production methods, unlike the Union industry producers using natural raw materials, i.e. wine lees. Therefore, the Chinese capacity and potential for further exports is not limited to the current levels.

It was also established that Chinese producers were strongly export oriented and had a significant potential to increase their export volumes in particular to the Union should measures be allowed to lapse.

As established under recitals (89) to (93) the Union market is attractive for Chinese exports and there is therefore a strong incentive to increase exports to the Union in substantial quantities should measures be allowed to lapse.

Chinese imports were undercutting the Union industry's sales price by 19 %. As an indication of the price level at which it is likely that Chinese the product under review will be imported into the Union market should the measures be repealed, the level of Chinese import prices to the Union without anti- dumping duties were taken into account. The comparison during the review investigation period showed that Chinese prices without anti-dumping duties would undercut the Union industry sales prices on average by 26 %.

Furthermore, the price levels at which the product under review was exported from China to other third countries was analysed. As explained in the recitals (85) to (88) above, Chinese producers exported significant quantities of the product under review to third countries other than the Union. Chinese prices to other third countries were found on average to be lower than the Union industry's prices also by 26 %.

On this basis, it is concluded that imports from China will very likely exert an even higher price pressure on the Union industry than the one they exerted during the review investigation period, should the measures be repealed.

Based on the above circumstances, in the absence of anti-dumping measures, Chinese exporting producers will have an incentive to increase significantly the volume of their imports into the Union market at low dumped prices exerting a downward pressure on the prices prevailing in the Union.

An increasing volume of Chinese imports — which is likely, given the available spare capacities — coupled with the expected further price pressure in absence of anti-dumping duties, will likely have a significant negative impact on the situation of the Union industry.

Indeed, should this scenario materialise, it is unlikely that the Union industry will be able to decrease its prices without incurring significant losses to match the further decreased Chinese prices in absence of anti-dumping duties. An indication in this respect is given by the fact that during the period considered the Union industry did not decrease its sales prices to the levels that would have matched prices of the Chinese imports, even in a situation of decreasing cost of production, since they were already below costs.

Furthermore, in such a scenario, should the Union industry keep its price levels, it is likely that it would lose sales volume and market share as significant larger volumes of imports from China would likely enter the market at even lower prices. This would cause further losses to the Union industry.

On this basis, it is concluded that the repeal of the measures would in all likelihood result in an increase of dumped imports originating in China resulting in a downwards pressure on Union industry prices and a further worsening of the already dire economic situation of the Union industry. Therefore it is concluded that the repeal of the measures against China would in all likelihood result in the recurrence of injury to the Union industry.

One exporting producer claimed that there would be no likelihood of recurrence of injury should anti-dumping duties be repealed. In support of this claim, it was argued that the price pressure in the Union is driven by the Union industry and that Chinese exporting producers did not decrease their sales prices in line with their decrease in import volume which would show that they had no intention to decrease prices in order to gain market share.

In this respect, it should be pointed out that such claims overlook the fact that the production capacity and spare capacity in China, the attractiveness of the Union market for Chinese imports, the possible price levels of Chinese imports all contribute to the Commission's findings on likelihood of recurrence of injury, should the measures be repealed. These aspects are sufficiently explained in recitals (151) to (161). In addition, no new factual elements were submitted in support of these claims. Therefore, this claim was rejected.

In accordance with Article 21 of the basic Regulation, it was examined whether maintaining the existing anti-dumping measures against China would be against the interest of the Union as a whole. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users.

All interested parties were given the opportunity to make their views known pursuant to Article 21(2) of the basic Regulation.

It should be recalled that, in the original investigation as well as in the subsequent expiry review investigation, the adoption and maintenance of measures was considered not to be against the interest of the Union. Furthermore, the fact that the present investigation is a review, thus analysing a situation in which anti-dumping measures have already been in place, allows the assessment of any undue negative impact on the parties concerned by the current anti-dumping measures.

On this basis, it was examined whether, despite the conclusions on the likelihood of recurrence of injurious dumping, compelling reasons existed which would lead to the conclusion that it is not in the Union interest to maintain measures in this particular case.

Based on the above, the Commission concluded that the situation of the Union industry would deteriorate, should the measure be repealed, and lead to a recurrence of material injury. The Union industry would not be in a position to compete with the increased volume of Chinese imports sold at injurious dumped prices. Therefore, should measures be allowed to lapse, any recovery would be unlikely and the mere existence of some of the companies would be put in danger, leading to closures and job losses on the Union market.

As mentioned in recital (127), climatic/harvest-related conditions have an impact on the cost of production and the prices of the Union industry. During the previous investigations, the Union industry has been able to be profitable in favourable conditions and has proven to be viable. However, in this investigation, during the period considered, the Union industry had become loss-making as despite the measures, the dumped imports from China have continued to enter the Union market undercutting the Union industry prices and supressing the prices below the Union industry's cost of production as explained in recitals (133) and (139).

It can be reasonable expected that the Union industry will continue to benefit from the measures and the maintenance of the anti-dumping measures would help the Union industry to increase its prices to reasonable levels covering its cost of production and thus improve its profitability.

Accordingly, the Commission concluded that the maintenance of anti-dumping measures against China would clearly be in the interest of the Union industry.

No importers cooperated in the case at hand. It is recalled that in the previous investigations it was found that the impact of the imposition of measures would not be significant. No traders/importers cooperated in the current investigation. Bearing in mind that there is no evidence suggesting that the measures in force considerably affected importers, the Commission concluded that the continuation of measures will not affect the Union importers.

The product under review is mainly used in the wine and food industry as a food and beverage additive, and in the construction industry as a retardant in the production of gypsum.

Ten known users have been contacted in this investigation and invited to cooperate. Four users replied to the questionnaire, two were active in the construction industry, while the other two were active in the food industry.

It should also be kept in consideration that the viability of Union industry is necessary in order to maintain diverse supply sources for the product under review, which is also in the interest of the users. Furthermore, a considerable part of the Chinese imports are made from Hangzhou Bioking with no anti-dumping duties. Even if measures against China as a whole were maintained, Hangzhou Bioking will not fall within the scope of these measures.

Taking into account all of the factors outlined above, the Commission concluded that there are no compelling reasons against the maintenance of the anti-dumping measures in force.