Opinion of Mr Advocate General Tesauro delivered on 21 March 1991

1 Original language: Italian.

2 It should be noted that the panics to these proceedings referred to a simplified case: that of an associated imponer who, following the imposition of an antidumping duty, decided to increase the resale prices by an amount equivalent to the dumping margin previous ascertained, the other factors (other costs, profit margin, normal value) remaining unchanged. The applicants' situation, to which the contested decisions relate, is somewhat different. In their case, there was not only an increase in the resale prices but also a decrease in the other costs incurred between impon and resale, together with a drop in the normal value. However, these are differences which have no importance for the purposes of the present analysis. In the present proceedings, the fundamental issue is whcdicr or not it is true that dumping is brought to an end where the constructed expon price (without deduction of die duties paid) is increased to an extent equal to the dumping margin and, therefore, becomes equal to the normal value. The precondition, dierefore, is diat, as a result of application of the duty, an increase has occurred in the constructed expon price; it is of little importance whether that increase derived from an increase in the resale prices or (inter alia) from a drop in the importer's costs: what is important is that, without deduction of the duty, the constructed expon price has risen by an amount equal to the dumping margin and finally corresponds to the normal value. Whatever the reason for the increase in the constructed export price (increase in resale prices and/or decrease in costs), the question, as indicated, remains unchanged: essentially it must be ascertained whether such an increase is sufficient to eliminate the dumping (as the applicants maintain) or whether an even greater increase is necessary (the latter being die necessary solution if the rule that duties must be deducted in order to determine the constructed export price were in fact applied). That having been said, reference will be made hereinafter to the simplified hypothesis described at the outset, where die increase in the constructed export price derived only from a change in the price factor (an increase equal to the dumping margin), the odier important factors remaining unchanged.

3 In the preamble to the decision, the Commission states: (The Commission) is of the opinion that the wording of Article 2(8)(b) is clear: all duties, including antidumping duties, have to be deducted from the resale price. The Commission would therefore, by granting the applicants' request, infringe the express requirements or Article 2(8)(b) and of part 11(b) and (c) of the notice. Regulation (EEC) No 2176/84 establishes different rules for the determination of the export price in different situations depending on whether the importer is related to the exporter or not. This cannot be considered discriminatory.

4 A numerical example may perhaps better clarify the repercussions on determination of the dumping marcin and the right to reimbursement arising from deduction or non-deduction of the duties. Take for example a situation where: normal value 100 resale price 120 costs, profits, 40 constructed expon price 80 (120-40) dumping margin 20 (100-80) Then suppose that, following the introduction of an antidumping duty of 20, the importer concerned increases the resale price to the first independent purchaser by an amount exactly equivalent to the dumping margin of 20: the resale price is raised from 120 to 140. Nevertheless, if, in such circumstances, the duty paid is considered as a cost incurred between importation and resale, it will have to be concluded that the imponer, who increased the resale price in an amount equal to the dumping margin, has not brought the dumping to an end. If the duty paid is deducted from the resale price, in the same way as a cost, the result will be that, notwithstanding the increase in the resale price, the difference between the normal value and the export price has remained wholly unchanged. If from the new resale price of 140 there is deducted not only an amount of 40, equivalent to the costs and profits, but also the additional amount of 20, corresponding to the duty paid, we arrive at a constructed expon price of 80 (140 — 40 — 20) and therefore there is still a dumping margin of 20 (100 — 80). From this it must be concluded that, although the resale price has been raised from 120 to 140, the dumping continues to exactly the same extent as previously and that therefore the imponer must continue to pay the duty previously imposed on him. What should the imponer in question do in order to bring the dumping to an end and oDtain a refund of the duties paid? On the basis of the reasoning thus far put forward, the answer Ís simple. The imponer must increase the resale price by twice tnc dumping margin, not merely by an amount equal to it. In fact, if the importer raises the resale price from 120 to 160, thus incorporating an increase equal to twice the dumping margin of 20, the constructed expon price, after deduction of the antidumping duty of 20, will be equal to the normal value of 100 (constructed expon price = 160 — 40 — 20). Conversely, if it is considered that the duties paid do not constitute a cost to be deducted in order to determine the constructed export price the results arrived at are entirely different, It will be sufficient for the associated importer to increase the resale price by only the same amount as the dumping margin for it to be concluded that the dumping has been completely eliminated and that consequently the duties paid must be refunded. In the example given it will therefore be sufficient for the resale price to be raised from 120 to 140: at a price of 140, after deduction of costs and profits of 40, an expon price of 100 is obtained, which is equivalent to the normal value.

5 As already pointed out, the parties agree — the applicants confirmed that fact of the hearing — that in the review procedure the export price is to be constructed by deducting the amount of the antidumping duties paid. The reason for this will be better illustrated by an example. Let us consider once again the situation where: normal value 100 resale price 120 costs, profits, 40 constructed export price 80 (120-40) dumping margin 20 (100-80) Let us suppose that an antidumping duty of 20 is applied. Let us then suppose that, not withstanding collection of the duty, the resale price of the product remains unchanged, at 120. In that case, it is seen that the duty imposed has not had any effect on the prices, which must indicate that the dumping has not only not been eliminated, following application of the duty, but instead has been intensified. To the dumping margin already existing before the imposition of the duty is added a further margin, of the same magnitude, equal to the financial effort made to neutralize the duty in its entirety, thus ensuring that it does not give rise to an increase in price — which would have otherwise been the result. When that happens, the situation must be reexamined and a change in the measures adopted. It will be necessary to apply a further duty which takes account of the increase in the dumping margin which has taken place. In order to calculate the constructed export price for the purposes of that reexamination, account must be taken of the fact that the associated importer is already bearing an antidumping duty, whilst continuing to apply the same resale price. From the accounting point of view, that can be done by deducting the said duty from the resale price, together with the other costs and profits. Thus, in the example given above, the new constructed export price will become 60 (and no longer 80), thus being equal to the difference between the resale price (which remained 120), on the one hand, and, on the other, the antidumping duty already borne (20) and the profits and other costs (40). Where the constructed export price is reduced from 80 to 60, the dumping margin will be increased from 20 to 40: the Community will be able to increase the antidumping duty, raising it from 20 to 40, unless a lower duty is sufficient to eliminate the harm caused to the Community industry.

6 That is obvious where it is the buyer who pays the duty subsequently refunded to him. But the same situation arises where the duty is paid by the importer. In that case, according to the Commission, the resale price (temporarily) incorporates a twofold increase. Within that twofold increase, one unit corresponds to the actual increase in the sale price whereas the second reflects the amount of the duty, the burden of which is thus placed on the buyer. The latter, therefore, will subsequently obtain the reimbursement, as a result of the transfer to him by the associated importer.

7 Naturally, the situation would be different if the importer was in a strong market position, in that he was able to determine the prices without excessive regard to the conduct of competitors. But it is clear that in such a situation — which has not been invoked in the present case — an independent importer and an associated importer would act according to the same logic, and both would seek to pass on to the buyer the temporary burden of payment of the duty (quite apart from the fact that where the trader was in a strong market position he would probably have less interest in engaging in dumping).