13 out of 50 exporting producers did not submit any questionnaire replies.

The Commission qualified these 13 exporting producers as non-cooperating pursuant to Article 18(1) of the basic Regulation and consequently based its findings for them on the facts available as explained in the next recital.

All 13 exporting producers, subject to a rate of duty of 17,9 %, had sharply increased their exports between 2014 and 2018, or exported above their capacity, as declared in the framework of the sampling exercise during the last expiry review investigation. In the absence of any economic justification other than circumvention practices, the Commission concluded that these exporting producers are engaged in channelling practices. Therefore, it is appropriate that their company-specific TARIC additional codes should be repealed and that these exporting producers should be subject to the residual rate of duty of 36,1 %.

Moreover, three of the 13 exporting producers were related to three other exporting producers having the non-sampled cooperating rate of duty of 17,9 % because of their own individual TARIC additional code.

Consequently, to avoid the risk of channelling practices via these related companies, before disclosure, the Commission preliminarily concluded that it was appropriate that their company-specific TARIC additional code should be repealed. The residual rate of duty of 36,1 % should also be applied to the three related exporting producers.

Following disclosure, one of the three companies came forward and claimed that it was not related to one of the companies that did not submit a questionnaire reply. At a hearing of 10 October 2019 and in a subsequent letter of 21 October 2019, it explained that its sampling reply from the expiry review had wrongly indicated that both companies were related, although in reality they were just business partners. Upon request of the Commission, the company provided the documents about its company structure and shareholders, which showed that indeed no such relationship exists. Absent the relationship and in view of that company’s demonstration that its increased export activity was in line with an increase of its production capacity in 2016, the Commission concluded that it was not necessary to repeal the company-specific TARIC additional code of this company.

• The 13 out of 50 exporting producers that did not submit any questionnaire replies (see recital (19) before), and;

• The two exporting producers that were related to two out of these 13 exporting producers and that had their own company-specific TARIC additional codes.

When analysing the questionnaire replies from the 37 exporting producers who did submit replies, the Commission found 18 of them to have submitted highly deficient replies as explained in the following recitals.

A first exporting producer submitted partial information and declared on 28 April 2019 that it had ceased producing the product concerned in August 2018. The Commission informed the company on 3 June 2019 that only exporting producers are entitled to an individual TARIC additional code. Therefore, it intended to remove its TARIC additional code and to treat the company as any other company under the TARIC additional code ‘B999’ in the future. The company did not submit further comments.

• Not providing the requested financial information such as the financial statements, trial balances, a breakdown of sales quantities and values;

• Providing incomplete, contradictory or only partial financial information, as regards the production process, production quantity and/or production capacity, the procurement of raw materials;

• Not replying to specific questions of the questionnaire;

• Not providing the requested official documents, such as the business licence, the proof of registration, the income tax returns;

• Not disclosing all related companies of the Group, despite the specific request in the questionnaire reply, and consequently, not providing the necessary questionnaire replies for these related companies.

• They had the right to provide further explanations in response to the Commission’s preliminary assessment within a one-week timeline from the sending of the letter, pursuant to Article 18(4) of the basic Regulation;

• The Commission intended to make its final findings based on facts available as provided under recitals (21) to (23) of the initiating Regulation.

• Three did not contest the Commission’s preliminary assessment;

• Six provided answers to the Commission’s preliminary assessment. In all cases the answers were unsatisfactory, false and/or misleading;

• One exporting producer admitted that it had stopped production after May 2018 and that it had become a trader of the product concerned.

Two other (out of these 15) exporting producers provided subsequently some additional documents, although their replies could still not be considered to be fully complete. Nevertheless, the Commission decided to carry out verification visits at the premises of these two exporting producers. During these verification visits, the Commission identified issues at both exporting producers, respectively the non-disclosure of related companies and incorrect declarations on the transformation of certain types of the product concerned. Therefore, the Commission informed on 7 August 2019 both exporting producers that it would maintain its intention to apply Article 18 of the basic Regulation. The Commission pointed to the fact that the exporting producers could not provide any evidence for an economic justification for their exports in 2018 other than channelling the production from other Chinese exporting producers. In the same letter, the Commission also informed both exporting producers that they were entitled to request a hearing with the Hearing Officer in Trade Proceedings by 16 August 2019 at the latest. Both companies did not request a hearing by the set deadline.

On 1 August 2019, another exporting producer submitted additional information as a reaction to the preliminary assessment of the Commission that its questionnaire reply was insufficient. The Commission analysed this additional information. However, some issues such as its failure to provide complete information on all its related companies remained unanswered. Therefore, on 13 August 2019, the Commission informed the exporting producer that it would maintain its intention to apply Article 18 of the basic Regulation. The Commission pointed in this respect to the fact that the exporting producer did not provide any evidence for its exports during 2018, which were more than four times higher than the tonnage the exporting producer actually produced during the same period. In the same letter, the Commission also informed the exporting producer that it was entitled to request a hearing with the Hearing Officer in Trade Proceedings by 23 August 2019 at the latest. The exporting producer did not reply by the set deadline.

By letters of 18 May and 26 June 2019, the Commission informed another exporting producer about the deficiencies of its replies with respect to the required documentation and about its intention to apply Article 18 of the Basic Regulation. On 2 July 2019, the exporting producer stated that it had provided all the required information and provided again its financial statements from 2015 to 2018, but did not fill out the questionnaire in respect of its related company. On 12 and 22 August 2019, it seized the Hearing Officer of the issue. By letter of 27 August 2019, the Commission informed the exporting producer about the reasons why its additional information of 2 July was still highly incomplete and therefore the Commission maintained its intention to apply Article 18 of the basic Regulation. The Commission pointed to the fact that this exporting producer could not provide any evidence for an economic justification for its exports in 2018 other than channelling the production from other Chinese exporting producers. In the same letter, the Commission informed the exporting producer of the possibility to follow up their request for a hearing by 2 September 2019 at the latest. The exporting producer did not reply by the set deadline. It sent an email to the Commission on 10 September 2019 with an attachment concerning the cancelation of its related company. By letter of 13 September 2019, the Commission reiterated that it maintained its intention to apply Article 18 of the basic Regulation as the latest submission did not offer any new information and the reply remained highly incomplete. As a result, it was concluded that this exporting producer could not provide any evidence for an economic justification for its exports in 2018 other than channelling.

Finally, one exporting producer requested a hearing with the Commission services, which took place on 18 July 2019. During this hearing, the exporting producer submitted the questionnaire reply of its Hong Kong trader and provided additional documentation and clarifications. After the hearing, this exporting producer provided on the specific request of the Commission all requested documents which showed that it did not engage in channelling practices by selling the product concerned from other unrelated exporting producers under its own TARIC additional code. As a result, the Commission did not maintain its intention to apply Article 18 of the basic Regulation for this exporting producer.

In summary, 17 out of the 18 exporting producers were duly informed about the consequences of their partial or non-cooperation under recitals (21) to (23) of the initiating Regulation. Therefore, for these 17 companies, the Commission based its findings on the facts available, inter alia, on the data regarding trends in exports to the Union (see for details recital (36)), and on its assessment of the level of deficiency in their questionnaire replies) pursuant to Article 18(1) of the basic Regulation.

• 15 had a rate of duty of 17,9 %, and had either sharply increased their exports between 2014 and 2018 or exported above their capacity;

• The two remaining exporting producers, that had individual rates of duty of 22,9 % and 23,4 %, higher than the non-sampled cooperating rate of duty of 17,9 %, had decreased their exports between 2014 and 2018.

In the absence of any economic justification other than circumvention practices, the Commission concluded that these exporting producers are engaged in channelling.

Consequently, it is appropriate that the residual duty of 36,1 % should be applied to these 17 exporting producers that initially had a lower duty as explained in recital (12), and their company-specific TARIC additional codes should be repealed. Only one exporting producer was found not to be engaged in circumvention practices as explained in recital (34), and therefore should maintain its individual TARIC additional code and its rate of duty of 17,9 %.

Following disclosure, three of these 17 companies submitted comments, which were not accepted by the Commission for the reasons set out in recitals (39) to (41) below.

One company argued that the questionnaire reply had not been properly filled out due to an ‘incomplete understanding of the questionnair e’ and a ‘lack of understanding of the work of the production department of the compan y’. It therefore requested to resubmit the questionnaire reply. In this respect, it should be pointed out that the company had ample opportunity to come forward during the investigation. On 3 June 2019, the Commission had informed it of its intention to repeal the company-specific TARIC additional code in view of the deficiencies identified. The Commission advised the company that it had the right to provide further explanations. Absent any reply, the Commission communicated on 26 June 2019 that ‘your company did not provide within the time-limits set the necessary information in the questionnaire reply concerning, inter alia, the financial and production data.’ Following disclosure, the company had another three weeks to submit the necessary data and comments. No additional information was received within those time limits. Therefore, it is appropriate to repeal the company-specific TARIC additional code, as already announced to that company on 3 and 26 June 2019.

Following disclosure, the second company claimed in an email of 11 October 2019 that it had been fully cooperating, and referred in this respect to its earlier submissions on 28 April and 6 June 2019. It also confirmed in this email that the company is a trading company as per its business licence and that it did not undertake in any channelling practices. In this respect, it should be pointed out that only exporting producers can receive a company-specific TARIC additional code. As the company itself had acknowledged that it was a trader, it is appropriate to repeal the company-specific TARIC additional code, as already announced to that company on 3 and 26 June 2019.

Finally, the third company claimed that it had been fully cooperating and that it is not involved in channelling practices. In this respect, it should be recalled that the Commission had already informed the company about the deficiencies in its questionnaire reply on 28 May and 26 June 2019. Moreover, on 27 August 2019, the Commission had again explained to the company that many other issues, as outlined in the first letter of 28 May, had remained unanswered. When the last deadline had passed, the Commission informed the company on 13 September 2019 that it failed to provide the requested documents. As a result, the company did not provide sufficient evidence for an economic justification for its increased exports to the Union in 2018 other than channelling production from other Chinese tableware producers. Therefore, it is appropriate to repeal the company-specific TARIC additional code, as already announced to that company on 28 May 2019, 26 June 2019 and 13 August 2019.

In addition, before disclosure, the Commission noted that three of the 17 exporting producers were related to four other companies having each their own individual TARIC additional code and thus having the non-sampled cooperating duty of 17,9 %.

Consequently, to avoid the risk of channelling practices via these related companies, the Commission concluded at that stage that it was appropriate that their company-specific TARIC additional code be repealed. The residual duty of 36,1 % should also be applied to the four related companies that initially had all the lower non-sampling cooperating rate of duty of 17,9 %.

Following disclosure, all four related companies provided comments on the Commission’s preliminary assessment that they were related to companies that submitted a highly deficient questionnaire reply, as set out in recitals (45) and (46) below.

Three of these four companies provided evidence that they were not related to the companies that had submitted a highly deficient reply. The Commission analysed the documentation and concluded that the three companies are indeed not related. Therefore, it is appropriate not to repeal the company-specific TARIC additional code of these three companies.

Moreover, following disclosure, one (company (C)) out of the two companies (companies (B) and (C)) that submitted highly deficient replies and that were related to the remaining fourth company (A), as mentioned in recital (46), came also forward. It requested the Commission to reconsider its intention of applying Article 18 of the basic Regulation. In this respect, it alleged that the main legal base of the Commission’s intention to apply Article 18 of the basic Regulation was that it had identified another related company. Moreover, the company claimed that there was only a remote connection between both companies.

For the same reasons set out above in recital (47), the company C also missed the opportunity to share relevant facts with the Commission, despite a letter of 28 May 2019 to the company to do so. In addition, it is incorrect to claim, in the context of Article 18 of the basic Regulation, that the specific disclosure letter of 27 September 2019 mainly referred to the relationship between companies A and C. The specific disclosure letter mentions specifically that the main reasons to apply Article 18 of the basic Regulation were set out in the letters of 28 May 2019 and 11 June 2019 to the company, where all failures to prove non-circumvention were listed.

Consequently, following disclosure, to avoid the risk of channelling practices via related companies, the Commission finally concluded that it is appropriate that the company-specific TARIC additional code of the company, mentioned in recital (46) is also repealed. The residual duty of 36,1 % should also be applied to the remaining related company that initially had the lower non-sampling cooperating rate of duty of 17,9 %.

The remaining 19 exporting producers submitted complete questionnaire replies and verification visits were subsequently carried out at their premises during the period from July to September 2019.

17 out of these 19 exporting producers were not found to be engaged in circumvention practices. A large majority of them were established before the imposition of measures against the PRC. The questionnaire replies and the on-spot verifications of, among other factors, production and capacity data, production facilities, costs of production, purchases of raw materials, semi-finished and finished goods and export sales to the Union, confirmed that all 17 exporting producers were only exporting goods manufactured by them.

With respect to the remaining two exporting producers, the Commission did not find them to be engaged in circumvention practices but identified the following issues as detailed in recitals (54) and (55).

For the first group, the Commission noted that it had one trading company, which is the parent company, and two exporting producers, all three located at the same premises in China. It also noted that the individual TARIC additional code (with a rate of duty of 17,9 %) had been attributed only to the parent company. As TARIC additional codes have to be attributed to exporting producers, it is appropriate that the Commission now transfers the TARIC additional code from the trading parent company to the two exporting producers of the group pursuant to Articles 2(1) and 9(5) of the basic Regulation.

In the second group, which also had another related company with its own individual TARIC additional code (with a rate of duty of 17,9 %), the Commission noted a systematic misdeclaration of origin during its verification of the warehouse. Employees were packing the product concerned into inner and outer boxes on which was printed misleading information regarding the country of origin and the producer. The country of origin mentioned was Singapore and the producer, a company located in the same country. The purchase order was received from a trader established in Hong Kong. The shipment itself was destined for a third country outside the EU, where there are also anti-dumping measures in force on tableware originating from China. The Commission checked at the premises of the companies all supporting documents concerning some selected export sale transactions to the Union and analysed in addition the export data from Singapore to the Union. The Commission could not establish that such illegal behaviour was applied for export sales destined for the EU. Therefore, in the absence of evidence of fraud regarding the EU market, the Commission concluded that the goods produced by both exporting producers and destined for the EU are correctly declared to be of Chinese origin, and thereby did not evade the applicable EU anti-dumping duties.

Consequently, it is appropriate that 18 out of the 19 exporting producers that submitted complete questionnaire replies and were visited at their premises maintain their duty of 17,9 %. Moreover, for one of these 19 exporting producers, as laid down in recital (54), it is appropriate that the Commission should transfer the TARIC additional code from the trading parent company to the two exporting producers of the group pursuant to Articles 2(1) and 9(5) of the basic Regulation.

In the recent expiry review, the Commission analysed the development of the import volumes from the PRC into the Union with reference to Eurostat data, which provide countrywide figures. In the present anti-circumvention investigation it was necessary to assess company-specific data. Such data are available in the database, set up pursuant to Article 14(6) of the basic Regulation. This database gathers the data reported each month to the Commission by Member States on imports of products subject to investigation under each TARIC additional code, as well as the measures, including registration. The Commission therefore used data from the 14(6) database to identify the change in the pattern of trade by comparing exporting producers with higher and lower duties for the purpose this investigation.

The exporting producers subject to this investigation accounted for 26 % of the total Chinese export volumes of the product under investigation to the Union in the RP, as reported by the 14(6) database. 48 of them had received the non-sampled cooperating duty of 17,9 %.

As explained in recital (51), only 19 exporting producers cooperated by submitting complete questionnaire replies. Moreover, as explained in recital (34), one additional exporting producer that initially submitted a highly deficient questionnaire reply maintained finally its individual duty of 17,9 %. These 20 exporting producers, all subject to the non-sampled cooperating duty of 17,9 %, accounted for 10 % of the total Chinese imports during the RP.

The volume of total imports from the PRC increased on an aggregate basis by 11 % over the IP and went from 348 003 tonnes in 2015 to 383 460 tonnes during the RP.

As explained in sections 2.3.1 and 2.3.2, the Commission noted that the exporting producers had either sharply increased their exports between 2014 and 2018, or exported above their capacity, as declared in the framework of the sampling exercise during the last expiry review investigation. In the absence of any economic justification other than circumvention practices, the Commission based its findings for these 30 exporting producers on the facts available, inter alia, data regarding their trends in exports to the Union, and the level of deficiency in their questionnaire replies pursuant to Article 18(1) of the basic Regulation and concluded that all of them are involved in circumvention practices. These 30 exporting producers accounted for 16 % of the total Chinese imports during the RP.

The 30 exporting producers engaged in circumvention increased their sale volumes to the Union from 52 497 tonnes in 2015 to 63 227 tonnes in 2018. This increase by more than 20 % is in clear contrast with the increase of all Chinese imports into the Union by about 11 %, as laid down in the table in recital (60) of this Regulation.

• The 28 exporting producers subject to the non-sampled cooperating rate of duty (17,9 %) and engaged in circumvention practices increased their sales volume to the Union by about 12 600 tonnes on an aggregate level (or an average increase in sales volume to the Union per exporting producer of 450 tonnes), whereas the remaining exporting producers subject to the non-sampled cooperating rate of duty (about 370 exporting producers in total)12 increased their sales volume to the Union by only about 20 000 tonnes during the same period (or an average increase in sales volume to the Union per exporting producer of 54 tonnes);

• The two exporting producers with individual cooperating rates of duty, of 22,9 % and 23,4 % (higher than the non-sampled cooperating duty of 17,9 %) decreased their sales volume to the Union by about 1 900 tonnes, whereas the other three exporting producers with individual rates of duty (not targeted by this investigation) increased their sales volume by 1 450 tonnes. The latter exporting producers had received a – relatively lower — individual duty of respectively 13,1 %, 17,6 % and 18,3 % in the initial investigation.

These changes in trade flows to the Union constitute a change in the pattern of trade between individual exporting producers in the country subject to measures and the Union, which stems from a practice, process or work for which the investigation did not bring to light any due cause or economic justification other than the avoidance of the residual or the higher duty in force on tableware and kitchenware originating in the PRC.

Article 13(1) of the basic Regulation requires that the change in the pattern of trade stem from a practice, process or work for which there is insufficient due cause or economic justification other than the imposition of the duty. The practice, process or work includes, inter alia, the reorganisation by exporters or producers of their patterns and channels of sales in the country subject to measures in order to have their products exported to the Union through producers benefiting from an individual duty lower than that applicable to the products of the manufacturers.

As explained in sections 2.3.1 and 2.3.2, the Commission concluded that 30 out of the 50 exporting producers are involved in channelling practices. These represented 16 % of the total import volumes into the Union during the reporting period, as reported by the 14(6) database.

The Commission also received in 2018 evidence from the Slovenian customs authorities, showing that the product concerned was imported to the Union by another exporting producer (with a lower duty) than the one that actually manufactured it (with a higher duty). Moreover, during its analysis in the framework of a new exporter review, the Commission also collected evidence of a similar channelling practice whereby the product concerned was on the basis of the packaging labelling imported to the Union by another exporting producer (with a lower duty) than the one that actually manufactured it (with a higher duty). This confirms the findings of the investigation.

In light of the considerations above, the Commission established that channelling practices of the product under investigation were taking place on a wide scale.