Avis juridique important

Commission Regulation (EC) No 560/2002 of 27 March 2002 imposing provisional safeguard measures against imports of certain steel products Official Journal L 085 , 28/03/2002 P. 0001 - 0039

Commission Regulation (EC) No 560/2002 of 27 March 2002 imposing provisional safeguard measures against imports of certain steel products THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 3285/94 of 22 December 1994 on common rules for imports and repealing Regulation (EC) No 518/94(1), as last amended by Regulation (EC) No 2474/2000(2), and in particular Articles 6 and 8 thereof, Having regard to Council Regulation (EC) No 519/94 of 7 March 1994 on common rules for imports from certain third countries and repealing Regulations (EEC) No 1765/82, (EEC) No 1766/82 and (EEC) 3420/83(3), as last amended by Regulation (EC) No 1138/98(4), and in particular Articles 5 and 6 thereof, After consultations within the Advisory Committee established under Article 4 of Regulation (EC) No 3285/94 and of Regulation (EC) No 519/94 respectively, Whereas: PROCEDURE (1) Several Member States ("the Member States concerned") have informed the Commission that trends in imports appear to call for safeguard measures; submitted information containing the evidence available as determined on the basis of Article 10 of Regulation (EC) No 3285/94 and Article 8 of Regulation (EC) No 519/94; and asked the Commission to impose provisional safeguard measures and to open a safeguard investigation. (2) The Member States concerned claim that there have been recent substantial increases in imports of certain steel products and that the closure of the US market implied by US measures not only substantially denies the Community producers an important outlet for their exports, but also creates the conditions for a huge diversion of imports from the US to the Community market. They claim that this could lead to a dramatic increase in the existing high level of imports at low prices, exacerbating the already serious disruption on the Community steel market which threatens serious injury to the Community producers. (3) The Member States concerned advise that the Community producers have submitted relevant information and urge the adoption of Community safeguard measures as a matter of urgency because any delay in their adoption would cause damage which it would be difficult to repair. (4) The Commission has informed all Member States of the situation and consulted the Advisory Committee on Safeguards on the terms and conditions of imports, import trends and the threat of serious injury to each of the sectors concerned, the various aspects of the economic and commercial situation with regard to the products in question, and the measures to be taken. (5) On 28 March 2002, the Commission published Notice of Initiation of a safeguard investigation concerning the products concerned. (6) In order to make a preliminary determination as to whether there exists a threat of serious injury to the Community producers caused by increased imports arising from unforeseen developments, and a critical situation justifying the urgent adoption of provisional safeguard measures; the Commission has considered both the evidence submitted, and that already obtained from its own sources. In particular, it has examined the evidence submitted by the Member States concerned, and carried out on the spot investigations at the premises of the main Community producers. (7) The Commission notes the recent announcement by the US of safeguard measures and the threat that this presents to the current critical situation of the Community producers. PRODUCTS CONCERNED (8) The products concerned are non alloy hot rolled coils, non alloy hot rolled sheets and plates, non alloy hot rolled narrow strip, alloy hot rolled flat products, cold rolled sheets, electrical sheets (other than GOES), metallic coated sheets, organic coated sheets, tin mill products, quarto plates, wide flats, non alloy merchant bars and light sections, alloy merchant bars and light sections, rebars, stainless bars and light shapes, stainless wire rod, stainless steel wire, fittings (< 609,6 mm), flanges (other than of stainless steel), gas pipes and hollow sections. The products concerned, together with the CN codes under which they are currently classified, are listed in Annex 1. LIKE OR DIRECTLY COMPETING PRODUCTS (9) The Commission's preliminary determination is that the products produced by the Community producers (hereinafter referred to as "the like products") are like or directly competing with the products concerned. That is to say that despite differences in the production process, and some differences in terms of quality, they have the same basic physical characteristics and the same uses and are sold via similar or identical sales channels. Price information is readily available and the products concerned and the products of the Community producers compete mainly on price. THE COMMUNITY PRODUCERS (10) The Community producers are the members of the following industry associations: the European Confederation of the Iron and Steel Industry ("Eurofer"), the European Steel Tube Association ("ESTA"), Fachvereinigung Stahlflanschen e.V. ("FS") and the Defence Committee of the EU steel butt-welding fittings industry ("DCEU"). On behalf of their members, these industry associations have informed the Member States concerned, and the Commission, of their concerns, in particular, as to the impact of the safeguard measure against imports of certain steel products adopted on 5 March 2002 by the US President following an investigation under s.201 of the US Trade Act of 1974. (11) These industry associations are representative of a major proportion of total Community production of the like and/or directly competing products. - Eurofer represents almost 95 % of Community production of iron and steel products. The associated industries are located in almost all Member States; - ESTA represents about 50 % of the tube producers in the Community, including eleven major producers. The associated industries are located in Greece, Italy, Luxembourg, the Netherlands, Spain, Sweden and the United Kingdom; - FS represents about 50 % of Community production of carbon steel flanges. The associated industries are located in Germany, Italy, France, Spain and the United Kingdom; - DCEU represents over 70 % of relevant Community production. The associated industries are located in Austria, France, Germany, Italy and the United Kingdom. UNFORESEEN DEVELOPMENTS (12) From 1998 onwards, in reaction to the Asian crisis(5), the US, which represents around one eighth of world steel consumption, began to make greater use of trade defence instruments in the steel sector with a view to protecting their domestic producers from competition, in a manner considered by many economic operators to be legally unjustified and economically excessive. Indeed, each of these measures which has been adjudicated in the WTO has been declared to be illegal. (13) Table 1 shows the annual number of anti-dumping and countervailing duty final determinations made by the US between 1997 and 2001 in relation to the steel sector, and illustrates the increase in activity in the last three years. >TABLE> (14) Of these measures, around half relate to products covered by this Regulation. As far as the year 2001 is concerned, around 82 % of the measures concern products under consideration in this Regulation. These measures had an increasingly discouraging effect on imports of steel products to the US. As a result of this increase in activity, the US had in place or pending some 164 anti-dumping measures, 41 countervailing duty measures and 2 safeguard measures relating to the steel sector by the end of 2001. (15) In the course of 2001, the US also announced further broadly based, action in the steel sector. In January, the US opened an investigation into steel under section 223 of the US Trade Act of 1974. In July, the US ITC announced a broad ranging investigation into steel under section 202 of the Trade Act of 1974; and in December, the ITC recommended import restrictions across a broad range of steel products. These actions, which culminated in the import restrictions announced by the US President on 5 March 2002, further discouraged imports of steel products to the US. (16) The increasingly protectionist stance adopted by the US in recent years in relation to steel led to a decrease in US steel imports of 33 % between 1998 and 2001. INCREASE IN IMPORTS (17) The Commission has carried out a preliminary analysis of the increase in imports to the Community of each of the products concerned over the same period (1998 to 2001), both in absolute terms, and relative to Community production and consumption. Imports of each of the products concerned increased considerably in that period. (18) The Commission has made a preliminary determination that there is clear evidence that imports of 15 of the products concerned have recently increased in a manner which is sudden, sharp and significant. These are non alloy hot rolled coils, non alloy hot rolled sheets and plates, non alloy hot rolled narrow strip, alloy hot rolled flat products, cold rolled sheets, electrical sheets (other than GOES), tin mill products, quarto plates, wide flats, non alloy merchant bars and light sections, alloy merchant bars and light sections, rebars, stainless steel wire, fittings (< 609,6 mm) and flanges (other than of stainless steel). These products are referred to as "the 15 products concerned". (19) In concrete terms, total imports of the 15 products concerned (specified in Annex 2) increased as follows. >TABLE> (20) Imports of the 15 products concerned, taken as a whole, increased by 2,5 % between 1998 and 2000, and by 13 % between 2000 and 2001 (the latest period for which statistics are available). Individual analysis of the increase in imports of each of these products clearly shows a recent increase in imports of each of the 15 products except 1 (product 9) in absolute terms. For all products (including product 9) there is a recent and sharp increase in imports relative to production. This recent increase ranges from 7,3 % to 209,7 % (see Annex 2). (21) The Community steel market is characterised by long term relationships between producers and users; long term supply contracts; and the attachment of significant importance to security of supply. Given the nature of that market and its sensitivity to increased supplies, which lead immediately to price depression, and consequently losses for the Community producers, these increases in imports, either in absolute and/or relative terms, in respect of each of the 15 products concerned, must be considered sharp. In the context of imports having already reached historically high levels in 2000, the further increase in imports shown in Annex 2 in relation to each product is also significant. THREAT OF SERIOUS INJURY (22) In order to make a preliminary determination as to whether there is clear evidence of serious injury or threat of serious injury to the Community producers of each of the like products, the Commission has evaluated all relevant factors of an objective and quantifiable nature having a bearing on the situation of the Community producers. In particular, for each product concerned, the Commission has evaluated the development of imports, consumption, production, productivity, capacity utilisation, sales, market share, prices, profitability and employment for the years 1997 to 2001. The key factors are provided in Annex 1. (23) Imports of 14 out of 15 of the products concerned grew in absolute terms between 2000 and 2001. The amount of growth varied as between products from 1067 tonnes to 512000 tonnes. The rate of growth in absolute terms varied between less than 1 % and 302 % depending on the product. For the 1 product whose imports fell marginally, the market share of imports increased substantially (by 8 %). (24) Imports of each of the 15 products concerned also grew relative to consumption between 2000 and 2001. Relative growth varied between 2 % and 285 % depending on the product. (25) Imports of each of the 15 products concerned also grew relative to production of the like or directly competing products by the community producers between 2000 and 2001. (26) In general, consumption of the products concerned and the like products was stagnant or declining between 2000 and 2001. Consumption of 9 of the products fell in this period, whilst consumption of the remaining 6 grew. (27) Production of the like products generally fell. Production of 11 of the like products fell, production of 3 of the like products increased marginally (less than 2 %) and production of 1 of the like products increased markedly. (28) Productivity increased for 14 of the 15 products concerned. For the 1 product for which productivity fell, the Commission's preliminary analysis indicates that this was due to a fall in the volume of production. (29) Capacity utilisation in relation to production of each of the like products generally decreased by between 5 % and 10 % from 2000 to 2001, although in 1 case it was virtually stagnant and in 2 cases it actually increased. (30) Sales of the like products in the EU generally fell between 2000 and 2001. Nevertheless, in the case of 2 products sales increased (although in relation to each of those products, the Community producers suffered loss of market share). (31) In each relation to each product, the Community producers suffered a loss of market share of between 1 % and 10 %. (32) The price of most products fell between 2000 and 2001. In addition, of those products whose price rose in this period, in all but 3 cases, 2001 prices were lower than the price in 1997. In normal conditions of international trade, the forecast improvement in the Community consumer sector would enable the industry to improve its situation by raising prices. However, low priced imports, resulting from trade deviation, have prevented Community producers from doing so. (33) Between 2000 and 2001, the profitability of the Community producers in relation to each like product has declined dramatically in all but 3 cases. In 2 of those cases, the Community producers are making a marginal profit (less than 2 %), and in 1 other they are incurring a material loss (- 8,2 %). This situation occurs against a background of already poor levels of profitability in previous years. (34) Employment in the Community steel industry in relation to ECSC products has declined by 20000 since 1997; and from 276300 in 2000 to 270000 in 2001. These trends appear to be broadly reflected in the information available on employment relating to each of the like products. (35) For each of the 15 products concerned, the Commission has analysed the factors mentioned in recital 22 to determine what effect increased imports at low prices are having on the Community producers of the corresponding like product. In particular, the Commission notes that imports of each of the products concerned grew in absolute terms, and relative to consumption and production. The Community producers are suffering loss of market share in relation to each product and the prices of their products have also generally fallen or remain depressed. Further, in relation to most products their profitability has significantly declined in the last year although in relation to some it merely remains low. (36) Based on its preliminary analysis, the Commission has made a preliminary determination that, in relation to each of the 15 products concerned, the Community producers are threatened with significant overall impairment in their position which is clearly imminent. It is anticipated that actual serious injury will occur even more rapidly both as a result of the announcement of US measures on 5 March, and of those measures being brought into force. CAUSATION (37) On the basis of the available information, the Commission has made a preliminary determination that there is clear evidence of a causal link between the reduction in US imports and growth in Community imports. This can best be explained by the fact that, for many steel producers, the US and the Community are their only viable export markets. In consequence, as both markets have the same types of industrial users, it is reasonable to conclude that steel imports diverted from the US market have been diverted to the Community market. Most of the third country producers affected by the US measures have exported to the Community for a number of years, and, more and more after the Asian crisis and the abovementioned US activities. (38) The Commission has also made a preliminary determination that there is clear evidence of a causal link between increased volumes of imports of each of the 15 products concerned and reduced sales volumes of each of the like products. Despite minor differences in the production process, and some differences in terms of quality, both products have the same basic physical characteristics and the same uses and are sold via similar or identical sales channels. Price information is readily available and the products concerned and the like products compete mainly on price. (39) Given those causal links, the Commission has made a preliminary determination that the Community producers are suffering reduced sales volumes and market shares due to increased imports arising as a result of trade deviation from the US. (40) The Commission has made a preliminary determination that there is a causal link between the reduction in sales revenues achieved by the Community producers and the reduction in their profitability. Any reduction in capacity utilisation increases the unit cost of production. Therefore, any reduction in the quantity of goods produced and sold reduces profitability. In addition, fixed costs cannot be reduced quickly or on a short term basis. (41) The Commission has also made a preliminary determination that there is a causal link between undercutting by the products concerned (i.e. selling at less than the actual price of the like products) and loss of sales revenues by the Community producers. In almost all cases, the products concerned were sold on the Community market at lower prices than the like products. Undercutting margins range up to 31 %. (42) The Commission has also made a preliminary determination that there is a causal link between underselling of the products concerned (i.e. selling at less than a constructed price for the like product based on cost plus a reasonable profit margin) and loss of sales revenues by the Community producers. In the few cases where no undercutting was found, this was because the Community prices were depressed and sales earned no or only minimal profit (underselling margins range from 15 % upwards). (43) The Commission therefore draws the preliminary conclusion that, in relation to each of the 15 products concerned, imports at low prices have caused and are causing - (1) a reduction in the volume of the like product sold by the Community producers; (2) a reduction in the prices at which the Community producers sold the like product; (3) a consequent reduction in the sales revenues of the Community producers and (4) a drastic reduction in the profitability of the Community producers. This has resulted in threat of serious injury to the Community producers. OTHER FACTORS (44) To ensure that the threat of serious injury is not attributable to other factors than the increase in imports, the Commission has carried out a preliminary analysis of other factors that may have contributed to the threat of serious injury suffered by the Community producers. These include the general downturn in the world economy in 2001; the short term economic slowdown resulting from the events of 11 September; and reduced exports by Community producers to the US. (45) That preliminary analysis indicates that the increase in imports is the substantial cause of the threat of serious injury to the Community producers. Under normal market conditions, the Community industry has no excess capacity due to the deep restructuring it has undergone in recent years. The reduction in exports to the US market resulting from the actions of the US may have had an impact on the Community industry, but it clearly does not break the causal link between the deviation of traffic from the US and the serious injury which it threatens. This is clearly shown by a comparison of Community import volumes to export volumes. Nevertheless, a detailed examination of all factors which have, or may have, contributed to the injury will be undertaken in the course of the Commission's investigation. CRITICAL SITUATION (46) The Commission has made a preliminary determination that critical circumstances exist in which delay would cause damage which it would be difficult to repair. As indicated above and illustrated in detail by Annex 1, threat of serious injury is clearly imminent. Community producers are already suffering a decline, notably in production, sales and profitability, as a result of increased imports of the 15 products concerned. (47) In relation to the like or directly competing products, production has fallen by 3 % between 2000 and 2001. Sales have fallen by 4 % in the same period, and the Community producers market share has declined. Profitability has also declined sharply in this period, and in many cases sales are being made at a loss. This decline is also reflected in a loss of employment in relation to production of the 15 products concerned. Employment across the industry has fallen from 276500 in 2000 to 270000 in 2001. (48) Available information relating to the performance of the Community producers in the first quarter of 2002 indicates that production, sales and profitability continue to decline. Prior to 5 March, the Community producers were clearly already in a weak position. The existing increase in imports had lead to oversupply on the Community market; reductions in prices and threat of serious injury. (49) These developments will be dramatically exacerbated by the announcement of US measures on 5 March, and by the bringing into force of those measures. (50) For the reasons explained at recital 17, the US and the Community markets constitute the only viable export markets for many steel producers. For products subject to a 15 % or 30 % duty under US safeguard measures, the US market is effectively closed. (51) The Commission has made a preliminary assessment of the possible destination of the huge volume of goods diverted from the US market. It notes that, given the weakness of other markets (notably Japan, South East Asia and South America), it is very unlikely that a significant quantity has been, or will be, diverted to such markets. Furthermore, producers in third countries suffer a difficult situation in their domestic markets, which are unable to absorb goods previously destined for the US market. Given the openness of the Community market, it may constitute the only opportunity for foreign producers to find an outlet for goods excluded from the US market. In these circumstances, the Commission concludes that a substantial proportion of the exports excluded from the US market have been, and will be, diverted to the Community. (52) Therefore, it can be anticipated that the application of import restrictions to the US market will result in a significant further increase in imports of the products concerned into the Community. Analysis indicates that around 15 million tonnes of steel products (worth around $4,1 billion), equivalent to total Community imports of the products concerned in 2000, are covered by the US measures and risk being diverted to the Community market. (53) The situation of the Community producers has been significantly worsened by the US measures announced on 5 March 2002 because these measures have forced the Community producers to revise their projections downwards to reflect further reductions in earnings (from both domestic sales and exports), and further damage to profitability. This is compromising current reorganisation within the Community industry. It is also undermining earlier restructuring and modernisation within the industry. (54) Because the Community producers' projections have been revised downwards, in order to cut costs, temporary or permanent closure of production facilities will be difficult to avoid. These closures may affect production not only of the like products, but also of other products produced using the same facilities. The social impact, according to industry estimates, could be the disappearance of a further 20000 jobs in the next few years. The negative impact could also extend to those activities which are dependent on the Community producers affected by the measure. (55) Bearing in mind that domestic consumption of the 15 products concerned is stagnant or declining and the rate at which imports were growing prior to the announcement of US measures, the situation of the Community producers was weak. (56) The considerable increase in the growth of imports which the US measures promise has forced the Community producers to revise sales and profits projections downwards. These revised projections demand immediate measures by Community producers to reduce costs and stem anticipated losses, including closing production facilities and laying off employees. The damage caused to the Community producers by taking such action would be difficult to repair. If such action is to be avoided, provisional safeguard measures must quickly be taken. (57) Therefore, the Commission considers that there exists a critical situation in which any delay in the adoption of provisional safeguard measures would cause damage which would be difficult to repair. It therefore concludes that provisional safeguard measures should be adopted without delay. COMMUNITY INTEREST (58) The Commission has carried out a provisional examination of the interests of the different economic operators - Community producers, users, importers and other economic operators. (59) The Community producers are generally acknowledged to be world class manufacturing industries. They have highly skilled workforces; enjoy high levels of productivity; and are able to meet the quality requirements of the most demanding customers. Any delay in the adoption of measures would seriously jeopardise their viability. The strategic importance of the steel industry has long been recognised. It is in the Community interest to have a healthy and competitive steel industry. It is clear that if no measures are taken, both the prices and the market share of the Community producers will further decrease resulting in reduced production, increased financial losses and loss of employment, both in the steel industry and in related industries. (60) Users, in general, seek the lowest possible price for steel, and it is clear that, without measures, prices would be lower. However, it is also in the interests of users to have a competitive and viable Community steel industry, able to meet their needs and ensure security of supply. Without measures, that cannot be guaranteed. Further, given the conservative nature of the provisional measures, which have been constructed so as only to prevent further large increases in imports, major changes in the conditions of imports of the 15 products concerned are not expected. (61) Importers have intervened and protested against the imposition of provisional measures stating that provisional measures could cause serious injury to them. Their submissions have been carefully considered. Nevertheless, it is considered that, as the provisional measures preserve existing flows of imports at historically high levels, their concerns are met for the time being and considering that provisional measures can only last for six months. During this period, their arguments will be further investigated. (62) Therefore, on balance, the Commission's preliminary determination is that the Community interest requires the adoption of provisional measures. The interests of producers, users, importers and other interested economic operators will be further considered in the course of the investigation. CONCLUSION (63) The Commission has made a preliminary determination that there is clear evidence that increased imports of the 15 products concerned, at low prices, are threatening to cause serious injury to the Community producers. On the basis of its analysis of the available information, the Commission also concludes that the increased imports have been caused by trade deviation resulting from the increasingly protectionist stance of the US. Taking account of the overall situation, the Commission considers that the Community producers are currently in a critical situation in which any delay in taking provisional measures would result in damage which it would be difficult to repair. ADOPTION OF PROVISIONAL MEASURES (64) On the basis of its preliminary determination that there is clear evidence of an increase in imports arising as a result of US action leading to deviation of traffic; that those increases threaten to cause serious injury to the Community producers; and that a critical situation exists in which any delay would cause injury which it would be difficult to remedy, the Commission considers that the adoption of provisional safeguard measures is justified. PROVISIONAL MEASURES - FORM AND LEVEL (65) By taking provisional safeguard measures, the Commission seeks to prevent the occurrence of serious injury, and damage which it would be difficult to repair, to the Community producers arising from diverted trade, whilst preserving, insofar as possible, the openness of the Community market, and maintaining the flow of imports at their current historically high levels. (66) In conformity with the Community's international obligations, the provisional measures should take the form of tariff measures relative to each of the 15 products concerned. To preserve the flow of imports to the Community at their current historically high levels, they should take the form of tariff quotas in excess of which an additional duty requires to be paid. To ensure access to the Community market to all traditional suppliers, such tariff quotas should be based on the average of the annual level of imports in the years 1999, 2000 and 2001, plus 10 % thereof. As the tariff quotas will be in operation for six months, they should be set at one half of that annual figure. (67) The additional duty should be fixed at a level which is consistent with the aim of preventing serious injury to the Community producers. (68) The additional duty for each individual product has been calculated on the basis of the constructed average non injurious price per tonne of the Community producers product. This price was constructed by taking the respective cost of production for each product to which was added a profit margin of 8 %. This profit margin was considered reasonable as it refers to profits of the Community producers in a normal trading situation unaffected by rising imports. This price was compared with the average price per tonne of the imported product concerned. The difference between these two prices was expressed as a percentage of the cif/Community border price of the imported product, and resulted in the additional duty per product at the rates set out in Annex 3. In order to avoid rates at a prohibitive level, a ceiling has been fixed at 26 %. The appropriate levels of additional duty will be further considered in the course of the investigation. (69) Certain of the 15 products concerned are subject to existing trade defence measures by the Community. These measures will be examined in the course of the investigation to establish what steps, if any, require to be taken to avoid the combination of the different types of measure giving a higher level of protection than is necessary. (70) Provision should be made to deal with the possibility of a surge in imports of the products concerned (or any of them) during the period of the provisional measures. DURATION (71) The provisional measures should apply for six months from the date on which this regulation enters into force. PRODUCTS COVERED (72) The provisional measures should apply to the 15 products concerned. (73) The provisional measures should apply without prejudice to the specific measures applicable in accordance with the Decision of the Representatives of the Governments of the Member States meeting within the Council of 19 December 2001, which provides that imports of ECSC products from certain countries are to be subject to quantitative quotas which may not be exceeded and are to be managed by a separate system of licensing. The products concerned by this decision originate in countries which are not members of the WTO, and have therefore been made subject to quantitative quotas for ECSC products. However, non ECSC products from these countries fall within the scope of this Regulation. (74) In conformity with EU legislation and the international obligations of the EU, the provisional measures should not apply to any product originating in a developing country as long as its share of imports of that product into the Community does not exceed 3 %. (75) The preliminary determination made by the Commission on a product by product basis shows that certain of the 15 products concerned originating in certain developing countries, do not meet the requirements to benefit from the abovementioned derogation. For each of the 15 products concerned, the developing countries to which the provisional measures apply should therefore be specified. Annex 4 specifies the developing countries for the purposes of this Regulation; and, for each of the 15 products concerned, the developing countries to which the provisional measures apply. ADMINISTRATION OF THE QUOTAS (76) The best way of ensuring optimal use of the tariff quotas is to allocate them in the chronological order of the dates on which declarations of release for free circulation are accepted, as foreseen in Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code(6). Equal and continuous access to the quotas should be ensured for all Community importers. This method of administration calls for close cooperation between the Member States and the Commission. (77) The eligibility of imported goods from developing countries to be excluded from the tariff quotas is dependent on the origin of the goods. The criteria for determining origin currently in force in the Community should therefore be applied, and in order to ensure that the tariff quotas are administered efficiently, presentation of a certificate of origin at the Community frontier should be required for imports of the products concerned, HAS ADOPTED THIS REGULATION: Article 1 1. A tariff quota is hereby opened in relation to imports into the Community of each of the 15 products concerned specified in Annex 3 (defined by reference to the CN codes specified in relation to it) from the date on which this Regulation enters into force until the day before the corresponding date of the sixth month following. 2. The conventional rate of duty provided for these products in Council Regulation (EC) No 2658/97, or any preferential rate of duty, shall continue to apply. 3. Imports of those products which are in excess of the volume of the relevant tariff quota specified in Annex 3, or without a request for benefit, shall be subject to an additional duty at the rate specified in Annex 3 for that product. That additional duty shall apply to the customs value of the product being imported. 4. During the period to which the provisional measures apply, if the Commission considers that imports in any month in 2002 are substantially higher than imports in the corresponding month in 2001, the Commission may review the form and/or level of the provisional measures. Article 2 1. The origin of any product to which this Regulation applies shall be determined in accordance with the provisions in force in the Community. 2. Qualification for any tariff quota opened under Article 1 or for the exemption under Article 7 shall be subject to presentation of a certificate of origin meeting the conditions laid down in Article 47 of Regulation (EEC) No 2454/93. 3. The certificate of origin referred to in paragraph 2 shall not be required for imports of products covered by a proof of origin issued or made out in accordance with the relevant rules established in order to qualify for preferential tariff measures. 4. Proof of origin shall be accepted only if the products meet the criteria for determining origin set out in the provisions in force in the Community. Article 3 The tariff quotas shall be managed by the Commission and the Member States in accordance with the management system for tariff quotas provided for in Articles 308a, 308b and 308c of Regulation (EEC) No 2454/93, as last amended by Regulation (EC) No 993/2001. This may be adapted if the Commission considers it desirable, as a result of experience gained during the period of validity of the provisional measures. Article 4 This Regulation shall be without prejudice to the specific measures applicable to imports of ECSC products by virtue of - the Decision of the Representatives of the Governments of the Member States meeting within the Council of 19 December 2001 on certain measures concerning trade in certain steel products covered by the ECSC Treaty originating in the Russian Federation, Kazakhstan and Ukraine(7), or - an agreement such as is referred to in Article 4 of that Decision. Article 5 Imports of the 15 products concerned which are already on their way to the Community on the date of entry into force of this Regulation, whose destination cannot be changed, shall not be attributed to the tariff quotas, or subject to the additional duty specified in Annex 3, and may be put into free circulation. Article 6 The Member States and the Commission shall cooperate closely to ensure compliance with this Regulation. Article 7 1. Subject to paragraph 2, imports of the 15 products concerned originating in one of the developing countries specified in Annex 4 shall not be subject, or allocated, to the tariff quotas, or subject to the additional duty specified in Annex 3. 2. For each of the 15 products concerned, Annex 4 specifies the developing countries to which the provisional measures apply. Article 8 This Regulation shall enter into force on the day following its publication in the Official Journal of the European Communities. This Regulation shall apply from 29 March 2002. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 27 March 2002. For the Commission Pascal Lamy Member of the Commission (1) OJ L 349, 31.12.1994, p. 53. (2) OJ L 286, 11.11.2000, p. 1. (3) OJ L 67, 10.3.1994, p. 89. (4) OJ L 159, 3.6.1998, p. 1. (5) The effects of the Asian crisis were felt around the world in 1998 and 1999. In particular, as Asian steel producers fought to maintain sales volumes in the face of the collapse of their domestic markets, they sought to open up new markets by offering low prices, and found the Community market to be an important outlet for their goods. In consequence, imports of the products concerned increased markedly in 1998, and prices fell sharply in 1999. (6) OJ L 253, 11.10.1993, p. 1. (7) OJ L 345, 29.12.2001, p. 71, p. 78 and p. 75. ANNEX 1 PRODUCTS CONCERNED >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> >TABLE> ANNEX 2 Growth in imports of the 15 products concerned >TABLE> ANNEX 3 Tariff quotas referred to in Article 1 >TABLE> ANNEX 4 List of products originating in developing countries to which the provisional measures apply >TABLE>

Commission Regulation (EC) No 560/2002

of 27 March 2002

imposing provisional safeguard measures against imports of certain steel products

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 3285/94 of 22 December 1994 on common rules for imports and repealing Regulation (EC) No 518/94(1), as last amended by Regulation (EC) No 2474/2000(2), and in particular Articles 6 and 8 thereof,

Having regard to Council Regulation (EC) No 519/94 of 7 March 1994 on common rules for imports from certain third countries and repealing Regulations (EEC) No 1765/82, (EEC) No 1766/82 and (EEC) 3420/83(3), as last amended by Regulation (EC) No 1138/98(4), and in particular Articles 5 and 6 thereof,

After consultations within the Advisory Committee established under Article 4 of Regulation (EC) No 3285/94 and of Regulation (EC) No 519/94 respectively,

Whereas:

PROCEDURE

(1) Several Member States ("the Member States concerned") have informed the Commission that trends in imports appear to call for safeguard measures; submitted information containing the evidence available as determined on the basis of Article 10 of Regulation (EC) No 3285/94 and Article 8 of Regulation (EC) No 519/94; and asked the Commission to impose provisional safeguard measures and to open a safeguard investigation.

(2) The Member States concerned claim that there have been recent substantial increases in imports of certain steel products and that the closure of the US market implied by US measures not only substantially denies the Community producers an important outlet for their exports, but also creates the conditions for a huge diversion of imports from the US to the Community market. They claim that this could lead to a dramatic increase in the existing high level of imports at low prices, exacerbating the already serious disruption on the Community steel market which threatens serious injury to the Community producers.

(3) The Member States concerned advise that the Community producers have submitted relevant information and urge the adoption of Community safeguard measures as a matter of urgency because any delay in their adoption would cause damage which it would be difficult to repair.

(4) The Commission has informed all Member States of the situation and consulted the Advisory Committee on Safeguards on the terms and conditions of imports, import trends and the threat of serious injury to each of the sectors concerned, the various aspects of the economic and commercial situation with regard to the products in question, and the measures to be taken.

(5) On 28 March 2002, the Commission published Notice of Initiation of a safeguard investigation concerning the products concerned.

(6) In order to make a preliminary determination as to whether there exists a threat of serious injury to the Community producers caused by increased imports arising from unforeseen developments, and a critical situation justifying the urgent adoption of provisional safeguard measures; the Commission has considered both the evidence submitted, and that already obtained from its own sources. In particular, it has examined the evidence submitted by the Member States concerned, and carried out on the spot investigations at the premises of the main Community producers.

(7) The Commission notes the recent announcement by the US of safeguard measures and the threat that this presents to the current critical situation of the Community producers.

PRODUCTS CONCERNED

(8) The products concerned are non alloy hot rolled coils, non alloy hot rolled sheets and plates, non alloy hot rolled narrow strip, alloy hot rolled flat products, cold rolled sheets, electrical sheets (other than GOES), metallic coated sheets, organic coated sheets, tin mill products, quarto plates, wide flats, non alloy merchant bars and light sections, alloy merchant bars and light sections, rebars, stainless bars and light shapes, stainless wire rod, stainless steel wire, fittings (< 609,6 mm), flanges (other than of stainless steel), gas pipes and hollow sections. The products concerned, together with the CN codes under which they are currently classified, are listed in Annex 1.

LIKE OR DIRECTLY COMPETING PRODUCTS

(9) The Commission's preliminary determination is that the products produced by the Community producers (hereinafter referred to as "the like products") are like or directly competing with the products concerned. That is to say that despite differences in the production process, and some differences in terms of quality, they have the same basic physical characteristics and the same uses and are sold via similar or identical sales channels. Price information is readily available and the products concerned and the products of the Community producers compete mainly on price.

THE COMMUNITY PRODUCERS

(10) The Community producers are the members of the following industry associations: the European Confederation of the Iron and Steel Industry ("Eurofer"), the European Steel Tube Association ("ESTA"), Fachvereinigung Stahlflanschen e.V. ("FS") and the Defence Committee of the EU steel butt-welding fittings industry ("DCEU"). On behalf of their members, these industry associations have informed the Member States concerned, and the Commission, of their concerns, in particular, as to the impact of the safeguard measure against imports of certain steel products adopted on 5 March 2002 by the US President following an investigation under s.201 of the US Trade Act of 1974.

(11) These industry associations are representative of a major proportion of total Community production of the like and/or directly competing products.

- Eurofer represents almost 95 % of Community production of iron and steel products. The associated industries are located in almost all Member States;

- ESTA represents about 50 % of the tube producers in the Community, including eleven major producers. The associated industries are located in Greece, Italy, Luxembourg, the Netherlands, Spain, Sweden and the United Kingdom;

- FS represents about 50 % of Community production of carbon steel flanges. The associated industries are located in Germany, Italy, France, Spain and the United Kingdom;

- DCEU represents over 70 % of relevant Community production. The associated industries are located in Austria, France, Germany, Italy and the United Kingdom.

UNFORESEEN DEVELOPMENTS

(12) From 1998 onwards, in reaction to the Asian crisis(5), the US, which represents around one eighth of world steel consumption, began to make greater use of trade defence instruments in the steel sector with a view to protecting their domestic producers from competition, in a manner considered by many economic operators to be legally unjustified and economically excessive. Indeed, each of these measures which has been adjudicated in the WTO has been declared to be illegal.

(13) Table 1 shows the annual number of anti-dumping and countervailing duty final determinations made by the US between 1997 and 2001 in relation to the steel sector, and illustrates the increase in activity in the last three years.

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(14) Of these measures, around half relate to products covered by this Regulation. As far as the year 2001 is concerned, around 82 % of the measures concern products under consideration in this Regulation. These measures had an increasingly discouraging effect on imports of steel products to the US. As a result of this increase in activity, the US had in place or pending some 164 anti-dumping measures, 41 countervailing duty measures and 2 safeguard measures relating to the steel sector by the end of 2001.

(15) In the course of 2001, the US also announced further broadly based, action in the steel sector. In January, the US opened an investigation into steel under section 223 of the US Trade Act of 1974. In July, the US ITC announced a broad ranging investigation into steel under section 202 of the Trade Act of 1974; and in December, the ITC recommended import restrictions across a broad range of steel products. These actions, which culminated in the import restrictions announced by the US President on 5 March 2002, further discouraged imports of steel products to the US.

(16) The increasingly protectionist stance adopted by the US in recent years in relation to steel led to a decrease in US steel imports of 33 % between 1998 and 2001.

INCREASE IN IMPORTS

(17) The Commission has carried out a preliminary analysis of the increase in imports to the Community of each of the products concerned over the same period (1998 to 2001), both in absolute terms, and relative to Community production and consumption. Imports of each of the products concerned increased considerably in that period.

(18) The Commission has made a preliminary determination that there is clear evidence that imports of 15 of the products concerned have recently increased in a manner which is sudden, sharp and significant. These are non alloy hot rolled coils, non alloy hot rolled sheets and plates, non alloy hot rolled narrow strip, alloy hot rolled flat products, cold rolled sheets, electrical sheets (other than GOES), tin mill products, quarto plates, wide flats, non alloy merchant bars and light sections, alloy merchant bars and light sections, rebars, stainless steel wire, fittings (< 609,6 mm) and flanges (other than of stainless steel). These products are referred to as "the 15 products concerned".

(19) In concrete terms, total imports of the 15 products concerned (specified in Annex 2) increased as follows.

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(20) Imports of the 15 products concerned, taken as a whole, increased by 2,5 % between 1998 and 2000, and by 13 % between 2000 and 2001 (the latest period for which statistics are available). Individual analysis of the increase in imports of each of these products clearly shows a recent increase in imports of each of the 15 products except 1 (product 9) in absolute terms. For all products (including product 9) there is a recent and sharp increase in imports relative to production. This recent increase ranges from 7,3 % to 209,7 % (see Annex 2).

(21) The Community steel market is characterised by long term relationships between producers and users; long term supply contracts; and the attachment of significant importance to security of supply. Given the nature of that market and its sensitivity to increased supplies, which lead immediately to price depression, and consequently losses for the Community producers, these increases in imports, either in absolute and/or relative terms, in respect of each of the 15 products concerned, must be considered sharp. In the context of imports having already reached historically high levels in 2000, the further increase in imports shown in Annex 2 in relation to each product is also significant.

THREAT OF SERIOUS INJURY

(22) In order to make a preliminary determination as to whether there is clear evidence of serious injury or threat of serious injury to the Community producers of each of the like products, the Commission has evaluated all relevant factors of an objective and quantifiable nature having a bearing on the situation of the Community producers. In particular, for each product concerned, the Commission has evaluated the development of imports, consumption, production, productivity, capacity utilisation, sales, market share, prices, profitability and employment for the years 1997 to 2001. The key factors are provided in Annex 1.

(23) Imports of 14 out of 15 of the products concerned grew in absolute terms between 2000 and 2001. The amount of growth varied as between products from 1067 tonnes to 512000 tonnes. The rate of growth in absolute terms varied between less than 1 % and 302 % depending on the product. For the 1 product whose imports fell marginally, the market share of imports increased substantially (by 8 %).

(24) Imports of each of the 15 products concerned also grew relative to consumption between 2000 and 2001. Relative growth varied between 2 % and 285 % depending on the product.

(25) Imports of each of the 15 products concerned also grew relative to production of the like or directly competing products by the community producers between 2000 and 2001.

(26) In general, consumption of the products concerned and the like products was stagnant or declining between 2000 and 2001. Consumption of 9 of the products fell in this period, whilst consumption of the remaining 6 grew.

(27) Production of the like products generally fell. Production of 11 of the like products fell, production of 3 of the like products increased marginally (less than 2 %) and production of 1 of the like products increased markedly.

(28) Productivity increased for 14 of the 15 products concerned. For the 1 product for which productivity fell, the Commission's preliminary analysis indicates that this was due to a fall in the volume of production.

(29) Capacity utilisation in relation to production of each of the like products generally decreased by between 5 % and 10 % from 2000 to 2001, although in 1 case it was virtually stagnant and in 2 cases it actually increased.

(30) Sales of the like products in the EU generally fell between 2000 and 2001. Nevertheless, in the case of 2 products sales increased (although in relation to each of those products, the Community producers suffered loss of market share).

(31) In each relation to each product, the Community producers suffered a loss of market share of between 1 % and 10 %.

(32) The price of most products fell between 2000 and 2001. In addition, of those products whose price rose in this period, in all but 3 cases, 2001 prices were lower than the price in 1997. In normal conditions of international trade, the forecast improvement in the Community consumer sector would enable the industry to improve its situation by raising prices. However, low priced imports, resulting from trade deviation, have prevented Community producers from doing so.

(33) Between 2000 and 2001, the profitability of the Community producers in relation to each like product has declined dramatically in all but 3 cases. In 2 of those cases, the Community producers are making a marginal profit (less than 2 %), and in 1 other they are incurring a material loss (- 8,2 %). This situation occurs against a background of already poor levels of profitability in previous years.

(34) Employment in the Community steel industry in relation to ECSC products has declined by 20000 since 1997; and from 276300 in 2000 to 270000 in 2001. These trends appear to be broadly reflected in the information available on employment relating to each of the like products.

(35) For each of the 15 products concerned, the Commission has analysed the factors mentioned in recital 22 to determine what effect increased imports at low prices are having on the Community producers of the corresponding like product. In particular, the Commission notes that imports of each of the products concerned grew in absolute terms, and relative to consumption and production. The Community producers are suffering loss of market share in relation to each product and the prices of their products have also generally fallen or remain depressed. Further, in relation to most products their profitability has significantly declined in the last year although in relation to some it merely remains low.

(36) Based on its preliminary analysis, the Commission has made a preliminary determination that, in relation to each of the 15 products concerned, the Community producers are threatened with significant overall impairment in their position which is clearly imminent. It is anticipated that actual serious injury will occur even more rapidly both as a result of the announcement of US measures on 5 March, and of those measures being brought into force.

CAUSATION

(37) On the basis of the available information, the Commission has made a preliminary determination that there is clear evidence of a causal link between the reduction in US imports and growth in Community imports. This can best be explained by the fact that, for many steel producers, the US and the Community are their only viable export markets. In consequence, as both markets have the same types of industrial users, it is reasonable to conclude that steel imports diverted from the US market have been diverted to the Community market. Most of the third country producers affected by the US measures have exported to the Community for a number of years, and, more and more after the Asian crisis and the abovementioned US activities.

(38) The Commission has also made a preliminary determination that there is clear evidence of a causal link between increased volumes of imports of each of the 15 products concerned and reduced sales volumes of each of the like products. Despite minor differences in the production process, and some differences in terms of quality, both products have the same basic physical characteristics and the same uses and are sold via similar or identical sales channels. Price information is readily available and the products concerned and the like products compete mainly on price.

(39) Given those causal links, the Commission has made a preliminary determination that the Community producers are suffering reduced sales volumes and market shares due to increased imports arising as a result of trade deviation from the US.

(40) The Commission has made a preliminary determination that there is a causal link between the reduction in sales revenues achieved by the Community producers and the reduction in their profitability. Any reduction in capacity utilisation increases the unit cost of production. Therefore, any reduction in the quantity of goods produced and sold reduces profitability. In addition, fixed costs cannot be reduced quickly or on a short term basis.

(41) The Commission has also made a preliminary determination that there is a causal link between undercutting by the products concerned (i.e. selling at less than the actual price of the like products) and loss of sales revenues by the Community producers. In almost all cases, the products concerned were sold on the Community market at lower prices than the like products. Undercutting margins range up to 31 %.

(42) The Commission has also made a preliminary determination that there is a causal link between underselling of the products concerned (i.e. selling at less than a constructed price for the like product based on cost plus a reasonable profit margin) and loss of sales revenues by the Community producers. In the few cases where no undercutting was found, this was because the Community prices were depressed and sales earned no or only minimal profit (underselling margins range from 15 % upwards).

(43) The Commission therefore draws the preliminary conclusion that, in relation to each of the 15 products concerned, imports at low prices have caused and are causing - (1) a reduction in the volume of the like product sold by the Community producers; (2) a reduction in the prices at which the Community producers sold the like product; (3) a consequent reduction in the sales revenues of the Community producers and (4) a drastic reduction in the profitability of the Community producers. This has resulted in threat of serious injury to the Community producers.

OTHER FACTORS

(44) To ensure that the threat of serious injury is not attributable to other factors than the increase in imports, the Commission has carried out a preliminary analysis of other factors that may have contributed to the threat of serious injury suffered by the Community producers. These include the general downturn in the world economy in 2001; the short term economic slowdown resulting from the events of 11 September; and reduced exports by Community producers to the US.

(45) That preliminary analysis indicates that the increase in imports is the substantial cause of the threat of serious injury to the Community producers. Under normal market conditions, the Community industry has no excess capacity due to the deep restructuring it has undergone in recent years. The reduction in exports to the US market resulting from the actions of the US may have had an impact on the Community industry, but it clearly does not break the causal link between the deviation of traffic from the US and the serious injury which it threatens. This is clearly shown by a comparison of Community import volumes to export volumes. Nevertheless, a detailed examination of all factors which have, or may have, contributed to the injury will be undertaken in the course of the Commission's investigation.

CRITICAL SITUATION

(46) The Commission has made a preliminary determination that critical circumstances exist in which delay would cause damage which it would be difficult to repair. As indicated above and illustrated in detail by Annex 1, threat of serious injury is clearly imminent. Community producers are already suffering a decline, notably in production, sales and profitability, as a result of increased imports of the 15 products concerned.

(47) In relation to the like or directly competing products, production has fallen by 3 % between 2000 and 2001. Sales have fallen by 4 % in the same period, and the Community producers market share has declined. Profitability has also declined sharply in this period, and in many cases sales are being made at a loss. This decline is also reflected in a loss of employment in relation to production of the 15 products concerned. Employment across the industry has fallen from 276500 in 2000 to 270000 in 2001.

(48) Available information relating to the performance of the Community producers in the first quarter of 2002 indicates that production, sales and profitability continue to decline. Prior to 5 March, the Community producers were clearly already in a weak position. The existing increase in imports had lead to oversupply on the Community market; reductions in prices and threat of serious injury.

(49) These developments will be dramatically exacerbated by the announcement of US measures on 5 March, and by the bringing into force of those measures.

(50) For the reasons explained at recital 17, the US and the Community markets constitute the only viable export markets for many steel producers. For products subject to a 15 % or 30 % duty under US safeguard measures, the US market is effectively closed.

(51) The Commission has made a preliminary assessment of the possible destination of the huge volume of goods diverted from the US market. It notes that, given the weakness of other markets (notably Japan, South East Asia and South America), it is very unlikely that a significant quantity has been, or will be, diverted to such markets. Furthermore, producers in third countries suffer a difficult situation in their domestic markets, which are unable to absorb goods previously destined for the US market. Given the openness of the Community market, it may constitute the only opportunity for foreign producers to find an outlet for goods excluded from the US market. In these circumstances, the Commission concludes that a substantial proportion of the exports excluded from the US market have been, and will be, diverted to the Community.

(52) Therefore, it can be anticipated that the application of import restrictions to the US market will result in a significant further increase in imports of the products concerned into the Community. Analysis indicates that around 15 million tonnes of steel products (worth around $4,1 billion), equivalent to total Community imports of the products concerned in 2000, are covered by the US measures and risk being diverted to the Community market.

(53) The situation of the Community producers has been significantly worsened by the US measures announced on 5 March 2002 because these measures have forced the Community producers to revise their projections downwards to reflect further reductions in earnings (from both domestic sales and exports), and further damage to profitability. This is compromising current reorganisation within the Community industry. It is also undermining earlier restructuring and modernisation within the industry.

(54) Because the Community producers' projections have been revised downwards, in order to cut costs, temporary or permanent closure of production facilities will be difficult to avoid. These closures may affect production not only of the like products, but also of other products produced using the same facilities. The social impact, according to industry estimates, could be the disappearance of a further 20000 jobs in the next few years. The negative impact could also extend to those activities which are dependent on the Community producers affected by the measure.

(55) Bearing in mind that domestic consumption of the 15 products concerned is stagnant or declining and the rate at which imports were growing prior to the announcement of US measures, the situation of the Community producers was weak.

(56) The considerable increase in the growth of imports which the US measures promise has forced the Community producers to revise sales and profits projections downwards. These revised projections demand immediate measures by Community producers to reduce costs and stem anticipated losses, including closing production facilities and laying off employees. The damage caused to the Community producers by taking such action would be difficult to repair. If such action is to be avoided, provisional safeguard measures must quickly be taken.

(57) Therefore, the Commission considers that there exists a critical situation in which any delay in the adoption of provisional safeguard measures would cause damage which would be difficult to repair. It therefore concludes that provisional safeguard measures should be adopted without delay.

COMMUNITY INTEREST

(58) The Commission has carried out a provisional examination of the interests of the different economic operators - Community producers, users, importers and other economic operators.

(59) The Community producers are generally acknowledged to be world class manufacturing industries. They have highly skilled workforces; enjoy high levels of productivity; and are able to meet the quality requirements of the most demanding customers. Any delay in the adoption of measures would seriously jeopardise their viability. The strategic importance of the steel industry has long been recognised. It is in the Community interest to have a healthy and competitive steel industry. It is clear that if no measures are taken, both the prices and the market share of the Community producers will further decrease resulting in reduced production, increased financial losses and loss of employment, both in the steel industry and in related industries.

(60) Users, in general, seek the lowest possible price for steel, and it is clear that, without measures, prices would be lower. However, it is also in the interests of users to have a competitive and viable Community steel industry, able to meet their needs and ensure security of supply. Without measures, that cannot be guaranteed. Further, given the conservative nature of the provisional measures, which have been constructed so as only to prevent further large increases in imports, major changes in the conditions of imports of the 15 products concerned are not expected.

(61) Importers have intervened and protested against the imposition of provisional measures stating that provisional measures could cause serious injury to them. Their submissions have been carefully considered. Nevertheless, it is considered that, as the provisional measures preserve existing flows of imports at historically high levels, their concerns are met for the time being and considering that provisional measures can only last for six months. During this period, their arguments will be further investigated.

(62) Therefore, on balance, the Commission's preliminary determination is that the Community interest requires the adoption of provisional measures. The interests of producers, users, importers and other interested economic operators will be further considered in the course of the investigation.

CONCLUSION

(63) The Commission has made a preliminary determination that there is clear evidence that increased imports of the 15 products concerned, at low prices, are threatening to cause serious injury to the Community producers. On the basis of its analysis of the available information, the Commission also concludes that the increased imports have been caused by trade deviation resulting from the increasingly protectionist stance of the US. Taking account of the overall situation, the Commission considers that the Community producers are currently in a critical situation in which any delay in taking provisional measures would result in damage which it would be difficult to repair.

ADOPTION OF PROVISIONAL MEASURES

(64) On the basis of its preliminary determination that there is clear evidence of an increase in imports arising as a result of US action leading to deviation of traffic; that those increases threaten to cause serious injury to the Community producers; and that a critical situation exists in which any delay would cause injury which it would be difficult to remedy, the Commission considers that the adoption of provisional safeguard measures is justified.

PROVISIONAL MEASURES - FORM AND LEVEL

(65) By taking provisional safeguard measures, the Commission seeks to prevent the occurrence of serious injury, and damage which it would be difficult to repair, to the Community producers arising from diverted trade, whilst preserving, insofar as possible, the openness of the Community market, and maintaining the flow of imports at their current historically high levels.

(66) In conformity with the Community's international obligations, the provisional measures should take the form of tariff measures relative to each of the 15 products concerned. To preserve the flow of imports to the Community at their current historically high levels, they should take the form of tariff quotas in excess of which an additional duty requires to be paid. To ensure access to the Community market to all traditional suppliers, such tariff quotas should be based on the average of the annual level of imports in the years 1999, 2000 and 2001, plus 10 % thereof. As the tariff quotas will be in operation for six months, they should be set at one half of that annual figure.

(67) The additional duty should be fixed at a level which is consistent with the aim of preventing serious injury to the Community producers.

(68) The additional duty for each individual product has been calculated on the basis of the constructed average non injurious price per tonne of the Community producers product. This price was constructed by taking the respective cost of production for each product to which was added a profit margin of 8 %. This profit margin was considered reasonable as it refers to profits of the Community producers in a normal trading situation unaffected by rising imports. This price was compared with the average price per tonne of the imported product concerned. The difference between these two prices was expressed as a percentage of the cif/Community border price of the imported product, and resulted in the additional duty per product at the rates set out in Annex 3. In order to avoid rates at a prohibitive level, a ceiling has been fixed at 26 %. The appropriate levels of additional duty will be further considered in the course of the investigation.

(69) Certain of the 15 products concerned are subject to existing trade defence measures by the Community. These measures will be examined in the course of the investigation to establish what steps, if any, require to be taken to avoid the combination of the different types of measure giving a higher level of protection than is necessary.

(70) Provision should be made to deal with the possibility of a surge in imports of the products concerned (or any of them) during the period of the provisional measures.

DURATION

(71) The provisional measures should apply for six months from the date on which this regulation enters into force.

PRODUCTS COVERED

(72) The provisional measures should apply to the 15 products concerned.

(73) The provisional measures should apply without prejudice to the specific measures applicable in accordance with the Decision of the Representatives of the Governments of the Member States meeting within the Council of 19 December 2001, which provides that imports of ECSC products from certain countries are to be subject to quantitative quotas which may not be exceeded and are to be managed by a separate system of licensing. The products concerned by this decision originate in countries which are not members of the WTO, and have therefore been made subject to quantitative quotas for ECSC products. However, non ECSC products from these countries fall within the scope of this Regulation.

(74) In conformity with EU legislation and the international obligations of the EU, the provisional measures should not apply to any product originating in a developing country as long as its share of imports of that product into the Community does not exceed 3 %.

(75) The preliminary determination made by the Commission on a product by product basis shows that certain of the 15 products concerned originating in certain developing countries, do not meet the requirements to benefit from the abovementioned derogation. For each of the 15 products concerned, the developing countries to which the provisional measures apply should therefore be specified. Annex 4 specifies the developing countries for the purposes of this Regulation; and, for each of the 15 products concerned, the developing countries to which the provisional measures apply.

ADMINISTRATION OF THE QUOTAS

(76) The best way of ensuring optimal use of the tariff quotas is to allocate them in the chronological order of the dates on which declarations of release for free circulation are accepted, as foreseen in Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code(6). Equal and continuous access to the quotas should be ensured for all Community importers. This method of administration calls for close cooperation between the Member States and the Commission.

(77) The eligibility of imported goods from developing countries to be excluded from the tariff quotas is dependent on the origin of the goods. The criteria for determining origin currently in force in the Community should therefore be applied, and in order to ensure that the tariff quotas are administered efficiently, presentation of a certificate of origin at the Community frontier should be required for imports of the products concerned,

HAS ADOPTED THIS REGULATION:

Article 1

1. A tariff quota is hereby opened in relation to imports into the Community of each of the 15 products concerned specified in Annex 3 (defined by reference to the CN codes specified in relation to it) from the date on which this Regulation enters into force until the day before the corresponding date of the sixth month following.

2. The conventional rate of duty provided for these products in Council Regulation (EC) No 2658/97, or any preferential rate of duty, shall continue to apply.

3. Imports of those products which are in excess of the volume of the relevant tariff quota specified in Annex 3, or without a request for benefit, shall be subject to an additional duty at the rate specified in Annex 3 for that product. That additional duty shall apply to the customs value of the product being imported.

4. During the period to which the provisional measures apply, if the Commission considers that imports in any month in 2002 are substantially higher than imports in the corresponding month in 2001, the Commission may review the form and/or level of the provisional measures.

Article 2

1. The origin of any product to which this Regulation applies shall be determined in accordance with the provisions in force in the Community.

2. Qualification for any tariff quota opened under Article 1 or for the exemption under Article 7 shall be subject to presentation of a certificate of origin meeting the conditions laid down in Article 47 of Regulation (EEC) No 2454/93.

3. The certificate of origin referred to in paragraph 2 shall not be required for imports of products covered by a proof of origin issued or made out in accordance with the relevant rules established in order to qualify for preferential tariff measures.

4. Proof of origin shall be accepted only if the products meet the criteria for determining origin set out in the provisions in force in the Community.

The tariff quotas shall be managed by the Commission and the Member States in accordance with the management system for tariff quotas provided for in Articles 308a, 308b and 308c of Regulation (EEC) No 2454/93, as last amended by Regulation (EC) No 993/2001. This may be adapted if the Commission considers it desirable, as a result of experience gained during the period of validity of the provisional measures.

This Regulation shall be without prejudice to the specific measures applicable to imports of ECSC products by virtue of

- the Decision of the Representatives of the Governments of the Member States meeting within the Council of 19 December 2001 on certain measures concerning trade in certain steel products covered by the ECSC Treaty originating in the Russian Federation, Kazakhstan and Ukraine(7), or

- an agreement such as is referred to in Article 4 of that Decision.

Article 5

Imports of the 15 products concerned which are already on their way to the Community on the date of entry into force of this Regulation, whose destination cannot be changed, shall not be attributed to the tariff quotas, or subject to the additional duty specified in Annex 3, and may be put into free circulation.

Article 6

The Member States and the Commission shall cooperate closely to ensure compliance with this Regulation.

1. Subject to paragraph 2, imports of the 15 products concerned originating in one of the developing countries specified in Annex 4 shall not be subject, or allocated, to the tariff quotas, or subject to the additional duty specified in Annex 3.

2. For each of the 15 products concerned, Annex 4 specifies the developing countries to which the provisional measures apply.

Article 8

This Regulation shall enter into force on the day following its publication in the Official Journal of the European Communities.

This Regulation shall apply from 29 March 2002.

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

Done at Brussels, 27 March 2002.

For the Commission

Pascal Lamy

Member of the Commission

(1) OJ L 349, 31.12.1994, p. 53.

(2) OJ L 286, 11.11.2000, p. 1.

(3) OJ L 67, 10.3.1994, p. 89.

(4) OJ L 159, 3.6.1998, p. 1.

(5) The effects of the Asian crisis were felt around the world in 1998 and 1999. In particular, as Asian steel producers fought to maintain sales volumes in the face of the collapse of their domestic markets, they sought to open up new markets by offering low prices, and found the Community market to be an important outlet for their goods. In consequence, imports of the products concerned increased markedly in 1998, and prices fell sharply in 1999.

(6) OJ L 253, 11.10.1993, p. 1.

(7) OJ L 345, 29.12.2001, p. 71, p. 78 and p. 75.

ANNEX 1

PRODUCTS CONCERNED

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ANNEX 2

Growth in imports of the 15 products concerned

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ANNEX 3

Tariff quotas referred to in Article 1

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ANNEX 4

List of products originating in developing countries to which the provisional measures apply

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