Case T‑444/11

Gold East Paper (Jiangsu) Co. Ltd

and

Gold Huasheng Paper (Suzhou Industrial Park) Co. Ltd

v

Council of the European Union

(Subsidies — Imports of coated fine paper originating in China — Methodology — Calculation of the advantage — Manifest error of assessment — Specificity — Depreciation period — Preferential tax treatments — Compensatory measures — Injury — Determination of the profit margin — Definition of the product concerned — Community industry — Causal link)

Summary — Judgment of the General Court (Third Chamber), 11 September 2014

1.      Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy against which countervailing measures may be imposed — Method of calculation

(Council Regulation No 597/2009, Arts 7(1) and (2))

2.      Common commercial policy — Protection against subsidisation practices of non-Member States — Injury — Discretion of the institutions — Limit — Manifest error in one of the factors for assessing the injury — Judicial review — Limits

(Council Regulation No 597/2009)

3.      Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy against which countervailing measures may be imposed — Calculation of the advantage conferred on the beneficiary — Choice of an external country as a reference point — Discretion of the institutions — Judicial review — Scope

(Council Regulation No 597/2009, Art. 6(d)(ii))

4.      Judicial proceedings — Application initiating proceedings — Formal requirements — No brief summary of the pleas in law on which the application is based — Inadmissibility — General reference to other documents, even if annexed to the application — Inadmissibility

(Statute of the Court of Justice, Art. 21, first para.; Rules of Procedure of the General Court, Art. 44(1)(c))

5.      Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy against which countervailing measures may be imposed — Calculation — Calculation of the normal depreciation period of goods — No obligation to take account of the durations communicated by the exporters concerned — Discretion of the institutions — Limits

(Council Regulation No 597/2009, Art. 7(3))

6.      Common commercial policy — Protection against subsidisation practices of non-Member States — Subsidy against which countervailing measures may be imposed — Loans granted by banks of a non-member State controlled by the public authorities — Existence of an advantage conferred by the public authorities

(Council Regulation No 597/2009, Arts 6(b), and 28(1), first para.)

7.      Common commercial policy — Protection against dumping or subsidising by non-member countries — Combination of anti-dumping and anti-subsidy measures — Lawfulness — Limits

(Council Regulations No 597/2009, Arts 14(2), and 15(1), and No 1225/2009, Art. 9(4))

8.      Common commercial policy — Protection against subsidisation practices of non-Member States — Imposition of a definitive countervailing duty — Calculation of the profit margin — Discretion of the institutions — Scope

(Council Regulation No 597/2009, Arts 2(d), and 15(1))

9.      Common commercial policy — Protection against subsidisation practices of non-Member States — Course of the investigation — Definition of the product concerned — Factors which may be taken into account

(Council Regulation No 597/2009, Arts 8, 9(1), and 10(6))

10.    Acts of the institutions — Statement of reasons — Obligation — Scope — Regulation imposing anti-subsidy duties

(Art. 296 TFEU)

11.    Common commercial policy — Protection against subsidisation practices of non-Member States — Injury — Establishing a causal link — Obligations of the institutions — Account taken of factors extraneous to the subsidy — Discretion — Burden of proof

(Council Regulation No 597/2009, Art. 8(1) and (6))

1.      In the context of a proceeding against subsidisation practices by non-member States, according to Article 7(2) of Regulation No 597/2009 on protection against subsidised imports from countries not members of the European Community, where the subsidy is not granted by reference to the quantities manufactured, produced, exported or transported, the amount of countervailable subsidy is determined by allocating the value of the total subsidy, as appropriate, over the level of production, sales or exports of the products concerned during the investigation period. In that respect, an EU institution is justified in using as denominator for calculating the amount of the subsidy the turnover figure representing total sales of the undertaking concerned, including adjustments of the export turnover figure in order to ensure that the turnover reflects the full sales value of the product concerned.

(see paras 43, 47-55)

2.      In the realm of measures to protect trade, the institutions of the European Union enjoy a broad discretion by reason of the complexity of the economic, political and legal situations which they have to examine. In those circumstances, judicial review is confined to ascertaining whether the Commission complied with the rules of procedure and the rules relating to the duty to give reasons, that the facts relied on in making the disputed decision were accurate and that there was no manifest error in the assessment of those facts or misuse of powers.

It is for the applicant to adduce evidence enabling the EU judicature to find that an EU institution made a manifest error of assessment when determining injury. In particular, in order to establish that an EU institution has committed a manifest error of assessment such as to justify the annulment of a measure, the applicant must adduce sufficient evidence to render the factual assessments in the contested measure implausible.

Moreover, in anti-subsidy cases, the Council and the Commission depend on the willingness of the parties to cooperate in providing them with the necessary information within the prescribed periods. Thus, the fact that an EU producer has not responded to a request for information cannot constitute an omission in the course of a specific examination based on objective evidence of the injury suffered by the EU industry.

In those circumstances, there is no obligation on the EU institutions under Regulation No 597/2009 to classify the macroeconomic and microeconomic criteria or any prohibition on constituting sub-groups of producers, provided that the Commission carries out an objective examination based on evidence which is itself objective.

(see paras 62, 71, 73, 225-228, 236, 243, 265, 269, 275, 291, 293, 363, 364)

3.      In the context of a proceeding against subsidisation practices by non-member States, an EU institution may be required to use an external benchmark as the point of reference for calculating the advantage conferred on the beneficiary, pursuant to Article 6(d)(ii) of Regulation No 597/2009. The choice of reference country falls within the discretion enjoyed by the institutions when analysing complex economic situations.

When exercising judicial review of the choice of reference country, it is for the EU judicature to verify that the EU institutions have not neglected to take account of essential factors for the purpose of establishing the appropriate nature of the country chosen and that the information contained in the documents in the case was considered with all the care required. They cannot be blamed for not taking into account market conditions in the reference country at the time of the granting of the subsidies at issue, rather than the conditions current at the time of the investigation.

(see paras 68, 72, 74, 87, 90)

4.      See the text of the decision.

(see paras 93, 103)

5.      In the context of a proceeding against subsidisation practices by non-member States, particularly with regard to assessing the normal depreciation period of goods in the industry concerned, in accordance with Article 7(3) of Regulation No 597/2009, the EU institutions may take into account the periods communicated by the EU industry and the cooperating exporting producers, rather than those communicated by the exporters concerned.

In that regard, the decision-making practice of the institution does not serve as a legal framework for determining the normal depreciation period, since the Commission enjoys a wide discretion in the sphere of measures to protect trade and, when exercising that discretion, is not bound by its past assessments, provided it complies with general principles of law, including the principle of equal treatment.

(see paras 150, 152, 153, 156, 160, 161, 166-169)

6.      In the context of a proceeding against subsidisation practices by non-member States, particularly as regards calculation of the advantage of a loan by the public authorities, in accordance with Article 6(b) of Regulation No 597/2009, the EU institutions are justified in finding the existence of a benefit on loans granted by banks of a non-member State, where those banks are controlled by the government and exercise government authority and the government of that non-member State has specific rules regulating the way interest rates float.

(see paras 187, 188)

7.      Article 14(2) of Regulation No 597/2009 does not oblige the EU institutions to choose between anti-dumping and anti-subsidy measures, nor does it prescribe any rules as to the appropriate combination of those two measures. However, the measures must not exceed the amount of the dumping and subsidies established or the injury margin, pursuant to Article 15(1) of Regulation No 597/2009 or Article 9(4) of Regulation No 1225/2009 on protection against dumped imports from countries not members of the European Community. Moreover, it is not for the Commission to propose to the Council that the investigation be terminated on the ground that the imposition of countervailing duties was irrelevant since the injury margin would have remained unchanged.

In a case where the total subsidy margin is 12%, for a total dumping margin of 43.5%, and the definitive countervailing duties (12%) and anti-dumping duties (8%) are capped at the level of the common injury margin, that being 20%, the measures imposed do not exceed the level of subsidies, dumping or injury established following the investigations. Similarly, where the difference between the dumping and subsidy margins (31.5%) is higher than the amount of anti-dumping duties (8%), the question of an overlap between the countervailing and anti-dumping duties does not arise either.

(see paras 217-219)

8.      In the context of a proceeding against subsidisation practices by non-member States, the profit margin to be used when calculating the target price that will remove the injury in question must be limited to the profit margin which the Union industry could reasonably count on under normal conditions of competition, in the absence of the subsidised imports. It would not be consistent with Article 2(d) and Article 15(1) of Regulation No 597/2009 to allow the Union industry a profit margin that it could not have expected if there were no subsidies.

Moreover, when they use the margin of discretion conferred on them by that regulation, the institutions are not obliged to explain in detail and in advance the criteria which they intend to apply in every situation, even where they create new policy options.

(see paras 287, 296)

9.      See the text of the decision.

(see para. 329)

10.    See the text of the decision.

(see paras 342-344)

11.    See the text of the decision.

(see paras 362-364)