As regards subsidisation, the Commission has at its disposal sufficient evidence at this stage that exports of the product concerned from Egypt are being subsidised, and that the exporting producer Jushi in Egypt benefited from these subsidies during the investigation period.

Direct transfer of funds, Government revenue foregone or not collected, and Government provision of goods or services for less than adequate remuneration.

As set out in the Notice of Initiation, the complainant alleged that those measures are subsidies since they involve a financial contribution from the Government of Egypt (including public bodies) and confer a benefit to the exporting producer of the product concerned. They are alleged to be limited to certain enterprises or industries or group of enterprises and/or contingent upon export performance and are therefore specific and countervailable.

The evidence of subsidisation was made available in the open version of the complaint and was further analysed in the memorandum on sufficiency of evidence.

The Commission at this stage therefore has sufficient evidence which tends to indicate that exports of GFR from Egypt are benefiting from countervailable subsidies.

The extraction from the Surveillance 2 database, together with the 2015 data from the complaint, shows massive imports of Egyptian GFR from 2015 to 2018. Imports have increased in volume in this period by 200 % and their market share has increased from 4,6 % in 2015 to 12,8 % in 2018.

Having regard to more recent data, the graph below shows the quantity of GFR imported from Egypt per quarter from January 2016 to September 2019. This covers the period considered (Q1 2016 to Q1 2019) and two quarters after the investigation period (‘IP’) (Q2 and Q3 2019).

Since the separate anti-dumping investigation mentioned in recital 3 concerns import of the same product from, among others, Egypt, such initiation may have already affected trade flows for the assessment at issue. Thus, the date of initiation of that case, namely 3 May 2019, will be considered as the beginning of the post-initiation period to assess the evolution of imports also in this investigation.

May to November 2019.
May to November 2018.
Import quantities from Egypt (tonnes)
	Monthly average (IP)	Post-initiation total	Same period in the IP total	Monthly average (post-initiation)	DifferenceSame period IP – post-initiation (total)	DifferenceTotal IP – post-initiation (monthly average)
Egypt	12 014	91 319	92 286	13 045	-1 %	+9 %
Source: Surveillance 2 database

Indeed, having regard to the investigation period and afterwards, the average volume of monthly imports between May and November 2019 is 9 % greater than that during the investigation period.

The total quantity of GFR originating in Egypt imported into the Union between May and November 2019 is almost at the same level than the total quantity imported during the same period in 2018.

Based on the analysis above, the Commission concluded that massive imports from Egypt have taken place. These quantities, together with the increase in market share throughout the period considered, amount to massive imports in a relatively short period within the meaning of Article 16(4) of the basic Regulation.

The increase in imports in fact coincided with the initiation of the anti-dumping investigation on the same product concerned, following a declining and a more stable import trend in the previous two quarters. This may be due to the possibility of the product concerned being subject to trade defence measures.

The complaint contains sufficient evidence that the Union industry is suffering material injury caused by the imports from Egypt which is difficult to repair, and that these constitute critical circumstances.

Imports from Jushi Egypt to the EU have increased substantially since 2015, when the Commission considered that the Union industry was not injured.

The Commission has sufficient evidence that the exporting producers’ subsidisation is causing material injury to the Union industry, which is difficult to repair. This evidence consists of detailed data, contained in the complaint, concerning the key injury factors set out in Article 8(4) of the basic Regulation.

Evidence of such circumstances includes the rapid deterioration of the situation of the Union industry characterised by a decline in profit from a peak of 13 % in 2016 down to 4,6 % in 2018 as well as a loss of market share of 11 percentage points during the same period (2016-2018).

This deterioration coincided with the increased volume of imports from Egypt shown in the graph above and a decrease of their average import price as described below.

The Commission found that the average unit price of GFR from Egypt has dropped from 1 007 EUR/tonne in Q1 2016 to 904 EUR/tonne in the IP. After the initiation of the anti-dumping investigation on the same product from Egypt, between May 2019 and November 2019, the unit price continued to fall, to an average of 884 EUR/tonne.

By 2018 imports from Egypt were significantly undercutting Union industry’s prices by 16 % according to the complaint.

In addition, the Commission assessed whether the injury suffered was difficult to repair. Considering that some users of GFR use lengthy processes to certify their suppliers, once they switch to a Chinese or Egyptian supplier it is unlikely for them to switch back to a Union producer in the short or even medium term. Such threat of permanent loss of market share or reduced income constitutes an injury which is difficult to repair.

The Commission therefore concluded that the evidence at hand shows that the Union industry is suffering injury that is difficult to repair and that circumstances are critical.

Finally, given the considerations laid down in Section 2.3 above, the Commission deemed it necessary to prepare for the potential retroactive imposition of measures by imposing registration, in order to preclude the recurrence of such injury. Indeed, the post-IP market conditions tend to confirm that the situation of the domestic industry is deteriorating due to the significant increase of subsidised imports at low prices.

In light of the above, the Commission found that there is no conclusive evidence showing that the registration of imports of the product concerned during the period of the pre-disclosure is not merited in this case.

Thus in accordance with Article 24(5a) of the basic Regulation, the Commission will register imports of the product concerned during the period of pre-disclosure.