OPINION OF ADVOCATE GENERAL
PITRUZZELLA
delivered on 10 April 2019 (1)
Case C‑709/17 P
European Commission
v
Kolachi Raj Industrial (Private) Ltd
(Appeal — Dumping — Implementing Regulation (EU) 2015/776 — Importation of bicycles consigned from Cambodia, Pakistan and the Philippines — Extension to those imports of the definitive anti-dumping duty imposed on imports of bicycles originating in China — Regulation (EC) No 1225/2009 — Article 13 — Circumvention — Assembly operations — Direct and indirect provenance of the parts concerned — Rules governing proof of circumvention)
1. The current economic reality is characterised by an increasing globalisation of international trade, offering undertakings ever more opportunities to relocate the production of goods, and particularly low-tech goods, to different countries. Against the backdrop of that global economy, it is becoming increasingly important for the European Union to have at its disposal trade defence instruments which are able to respond effectively to the challenges presented by that trade environment by ensuring that EU industry has effective protection against imports of dumped products. Of those instruments, the anti-circumvention rules play an essential role in order to guarantee the effectiveness of the anti-dumping measures adopted by the European Union.
2. The present case is the first time that the Court is faced with complex circumvention practices consisting in successive and multiple assembly operations taking place in various third countries. The fundamental issue raised by this case is how, when faced with such practices, the EU institutions can prove that circumvention exists.
3. This issue arises in the context of appeal proceedings brought by the European Commission against the judgment of the General Court of the European Union of 10 October 2017, Kolachi Raj Industrial v Commission (T‑435/15, (2) ‘the judgment under appeal’), by which the General Court annulled Implementing Regulation (EU) 2015/776 (3) (‘the regulation at issue’) extending the definitive anti-dumping duties imposed on imports of bicycles originating in China to imports of bicycles consigned, inter alia, from Pakistan, to the extent that it applies to Kolachi Raj Industrial (Private) Ltd (‘Kolachi’).
4. The present case is thus of particular importance in the context of EU anti-dumping rules as it will allow the Court to determine for the first time the evidential requirements which the EU institutions must satisfy in the case of complex circumvention practices.
I. The legal framework
5. At the material time, the provisions governing the adoption of anti-dumping measures by the European Union were to be found in Regulation (EC) No 1225/2009. (4)
6. Article 13 of that regulation concerns circumventions and was worded as follows:
‘1. Anti-dumping duties imposed pursuant to this Regulation may be extended to imports from third countries, of the like product, whether slightly modified or not, or to imports of the slightly modified like product from the country subject to measures, or parts thereof, when circumvention of the measures in force is taking place. … Circumvention shall be defined as a change in the pattern of trade between third countries and the [European Union] or between individual companies in the country subject to measures and the [European Union], which stems from a practice, process or work for which there is insufficient due cause or economic justification other than the imposition of the duty, and where there is evidence of injury or that the remedial effects of the duty are being undermined in terms of the prices and/or quantities of the like product, and where there is evidence of dumping in relation to the normal values previously established for the like product, if necessary in accordance with the provisions of Article 2.
The practice, process or work referred to in the first subparagraph includes, inter alia, … in the circumstances indicated in paragraph 2, the assembly of parts by an assembly operation in the [European Union] or a third country.
2. An assembly operation in the [European Union] or a third country shall be considered to circumvent the measures in force where:
(a) the operation started or substantially increased since, or just prior to, the initiation of the anti-dumping investigation and the parts concerned are from the country subject to measures, and
(b) the parts constitute 60% or more of the total value of the parts of the assembled product, except that in no case shall circumvention be considered to be taking place where the value added to the parts brought in, during the assembly or completion operation, is greater than 25% of the manufacturing cost, and
(c) the remedial effects of the duty are being undermined in terms of the prices and/or quantities of the assembled like product and there is evidence of dumping in relation to the normal values previously established for the like or similar products.
3. Investigations shall be initiated pursuant to this Article on the initiative of the Commission or at the request of a Member State or any interested party on the basis of sufficient evidence regarding the factors set out in paragraph 1. …
Investigations shall be carried out by the Commission. The Commission may be assisted by customs authorities and the investigations shall be concluded within 9 months.
When the facts as finally ascertained justify the extension of measures, this shall be done by the Commission …
5. Nothing in this Article shall preclude the normal application of the provisions in force concerning customs duties.’
II. The background to the dispute and the regulation at issue
7. The background to the dispute and the regulation at issue are set out, respectively, in paragraphs 1 to 19 and 20 to 27 of the judgment under appeal, to which I shall refer for more details.
8. For the purposes of the present proceedings, I shall confine myself to pointing out that, already in 1993, the European Union had imposed an anti-dumping duty on imports of bicycles originating in China, which was subsequently re-examined on a number of occasions and was ultimately maintained, in 2013, at a rate of 48.5%. (5)
9. In 2013, following a first anti-circumvention investigation, the European Union, by Implementing Regulation (EU) No 501/2013, (6) extended that anti-dumping duty to imports of bicycles consigned from Indonesia, Malaysia, Sri Lanka and Tunisia.
10. Having received a further complaint in 2014, the Commission initiated a second anti-circumvention investigation, this time concerning possible circumvention of the anti-dumping measures imposed in 2013 on imports of Chinese bicycles by imports of bicycles consigned from Cambodia, Pakistan and the Philippines.
11. As regards Pakistan specifically, Kolachi, the only producer of bicycles in that country, participated in that second investigation. That investigation revealed that Kolachi did not manufacture bicycle parts in Pakistan, but purchased them from Sri Lanka and China to assemble them into bicycles in Pakistan. (7) The majority of Kolachi’s suppliers were Sri Lankan companies which were part of the group to which it belonged — the owner of which was a person of Chinese origin — and in respect of whom it had already been found that they had participated in activities to circumvent the anti-dumping duty imposed by the European Union on the importation of Chinese bicycles. (8) The investigation also showed, first, that the supplier from which Kolachi purchased the majority (93%) of the bicycle parts used in its assembly operations in Pakistan, Flying Horse Pvt Ltd (‘Flying Horse’), was an intermediary which purchased a significant volume of those parts from a bicycle parts manufacturer established in Sri Lanka and, secondly, that that manufacturer was none other than Great Cycles Pvt Ltd, one of the companies related to Kolachi. The investigation revealed that the majority of the parts imported into Sri Lanka that were purchased from Flying Horse had been produced by Great Cycles using, for a quite significant part, Chinese materials. The Commission also found that there were a number of discrepancies which raised doubts as to the relationship between Flying Horse and Kolachi. (9)
12. On 18 May 2015, the Commission adopted the regulation at issue, by which it extended the definitive anti-dumping duty of 48.5% applicable to imports of bicycles originating in China to imports of bicycles consigned, inter alia, from Pakistan, whether declared as originating in Pakistan or not. (10)
III. The procedure before the General Court and the judgment under appeal
13. By application lodged at the Registry of the General Court on 29 July 2015, Kolachi brought an action for annulment of the regulation at issue in so far as that regulation concerns it. During the proceedings before the General Court, the European Bicycle Manufacturers Association (EBMA) was granted leave to intervene in support of the form of order sought by the Commission. (11)
14. In support of its action, Kolachi raised a single plea in law, alleging the infringement of Article 13(2)(b) of the basic regulation. In the first part of its single plea, Kolachi disputed the Commission’s analysis regarding the insufficient evidentiary value of the ‘Form A’ certificates of origin that Kolachi had supplied during the investigation to prove that the parts made by Great Cycles actually originated in Sri Lanka. In the regulation at issue, the Commission had rejected those forms on account of a number of inconsistencies. In the second part of its single plea, Kolachi submitted that the Commission had incorrectly applied Article 13(2)(b) of the basic regulation as a rule of origin to operations relating to the manufacture of bicycle parts in Sri Lanka, whereas the subject matter of the investigation was an alleged circumvention in Pakistan.
15. In the judgment under appeal, the General Court separated its reasoning into two parts.
16. First, in paragraphs 77 to 93 of the judgment under appeal, the General Court determined the rules governing proof of the conditions set out in Article 13(2) of the basic regulation to establish the existence of assembly operations constituting circumvention practices.
17. On the basis of the principles identified in its judgment of 26 September 2000, Starway v Council (T‑80/97, EU:T:2000:216; ‘the judgment in Starway’), the General Court held, in paragraph 83 of the judgment under appeal, that, although, as a general rule, it is sufficient to refer simply to where the parts used for assembling the final product are ‘from’ for the purposes of applying Article 13(2)(b) of the basic regulation, it may, however, be necessary, in case of doubt, to verify whether the parts ‘from’ a third country in actual fact originate in another country.
18. In paragraphs 84 and 85 of the judgment under appeal, the General Court went on to interpret the term ‘from’, used in Article 13(2)(a) of the basic regulation, as meaning that it must be understood as referring to ‘imports’.
19. On that basis, in paragraphs 86 and 87 of the judgment under appeal, the General Court, first, found that, since at least 47% of the parts used for assembling bicycles in Pakistan were imported from Sri Lanka after having been worked in that country, those parts could be regarded as being ‘from’ Sri Lanka and, secondly, took the view that that finding could not, however, prevent the Commission from verifying, in case of doubt, whether the parts ‘from’ Sri Lanka in actual fact originated in the country subject to the measures, in the present case China.
20. Secondly, on the basis of that interpretation of Article 13(2) of the basic regulation, the General Court set out to verify, in paragraphs 94 to 119 of the judgment under appeal, whether, without committing an error of law, the Commission could have concluded that the bicycle parts from Sri Lanka actually originated in China.
21. In paragraphs 94 to 106 of the judgment under appeal, the General Court rejected the first part of Kolachi’s single plea regarding the evidentiary value of the ‘Form A’ certificates of origin. That part of the judgment under appeal is not the subject of appeal.
22. By contrast, in paragraphs 107 to 119 of the judgment under appeal, the General Court upheld the second part of Kolachi’s single plea and held that the Commission had committed an error of law in applying ‘by analogy’ Article 13(2)(b) of the basic regulation to the bicycle parts purchased in Sri Lanka in order to verify their origin in connection with assembly operations in Pakistan. In so doing, according to the General Court, first, the Commission, in fact, examined whether the manufacture of the bicycle parts in Sri Lanka circumvented the anti-dumping measures on bicycles originating in China, which was not, however, the subject matter of the investigation in question. Secondly, it applied ‘by analogy’ a provision, Article 13(2)(b) of the basic regulation, which, as it is not a rule of origin, could not be applied in order to determine the origin of a product.
23. Consequently, the General Court annulled the regulation at issue in so far as it concerns Kolachi.
IV. Forms of order sought
24. On 8 December 2017, the Commission brought an appeal against the judgment under appeal. By that appeal, the Commission requests that the Court set aside the judgment under appeal, dismiss the action at first instance and order Kolachi to pay the costs, or, alternatively, refer the case back to the General Court for reconsideration and reserve the costs of both sets of proceedings.
25. In its response, Kolachi contends that the Court should dismiss the appeal in its entirety or, alternatively, correct the judgment under appeal and confirm the operative part of that judgment. It also requests that the Commission be ordered to bear its own costs in connection with the appeal and the costs incurred by Kolachi, and that the EBMA be ordered to bear its own costs in connection with the appeal.
26. The EBMA requests that the Court set aside the judgment under appeal, dismiss the action at first instance and order Kolachi to pay the costs of both sets of proceedings, or, alternatively, refer the case back to the General Court for reconsideration, reserve the costs of the proceedings at first instance and order Kolachi to pay the costs of the appeal proceedings.
V. Analysis of the appeal
A. Brief summary of the arguments of the parties
27. In support of its appeal, the Commission, supported by the EBMA, raises a single ground of appeal, divided into two parts, alleging errors of law in the interpretation of Article 13 of the basic regulation. That ground of appeal is directed against paragraphs 83 to 93 and 107 to 119 of the judgment under appeal.
28. The Commission refers in particular to the interpretation adopted by the General Court (12) which, in essence, established a presumption that a part is deemed to be ‘from’ a country within the meaning of Article 13(2)(a) of the basic regulation only when it is imported from that country, in other words when it has been shipped from that country, unless the Commission can demonstrate that that part ‘originates in’ the country subject to the anti-dumping measure.
29. In the first part of its single ground of appeal, the Commission submits that that interpretation is incorrect as it implies that where the parts used in the assembly come ‘from’ cannot be demonstrated by any other means than the rules of origin, which has no basis in the wording of Article 13 of the basic regulation and was not the legislature’s intention when it adopted the anti-circumvention regime. That provision establishes a legal regime which is separate from and independent of the rules of origin. Moreover, the interpretation adopted by the General Court limits the effectiveness of the anti-circumvention instrument. The criteria set by the rules of origin must be verified for each individual part, something which is impossible in the context of an anti-circumvention investigation.
30. In the second part, the Commission submits that the General Court erred in law in that its interpretation of Article 13(2) of the basic regulation contains a restriction on the type of evidence that it is able to use to demonstrate that parts used in assembly operations come ‘from’ the country subject to anti-dumping measures, and therefore prevented it from providing that evidence by any other means than the rules of origin.
31. Kolachi disputes the Commission’s arguments. In respect of the first part, it emphasises that neither the basic regulation nor the earlier regulations define the term ‘from’. Therefore, that concept is not autonomous, but must be interpreted on the basis of similar concepts in EU legislation including, in particular, the meaning of ‘origin’ in the field of customs, which, moreover, follows from Article 13(5) of the basic regulation.
32. Furthermore, the Commission has misread the judgment under appeal. The General Court did not rule on how to demonstrate where parts come from, but on whether the Commission was able to ‘verify’ the origin of the parts. The General Court thus did not restrict the means available to the Commission, nor did it hold that the concept ‘from’ is based on the rules of origin. In any event, the rules of origin, as understood in customs legislation, are the appropriate criterion to determine where parts are ‘from’. That interpretation is supported by the European Union’s obligations in the context of the World Trade Organisation (WTO). However, the thresholds set in Article 13(2)(b) of the basic regulation are not relevant in order to determine the origin of a part. Moreover, it is not at all proven that the interpretation adopted by the General Court limits the effectiveness of the anti-circumvention rules.
33. As regards the second part, Kolachi submits that, in the absence of a specific provision regarding the use of the criteria set out in Article 13(2)(b) of the basic regulation to determine the origin of parts, such use is unauthorised. Since that provision constitutes an exception to the general regime on the imposition of anti-dumping duties, it must be interpreted strictly. Furthermore, no logical link can be established between the criteria contained in Article 13(2)(b) of the basic regulation and determining where the parts at issue are from.
34. In the alternative, if the Court were to conclude that the judgment under appeal is vitiated by an error of law, Kolachi requests that the Court substitute the grounds by replacing, in the judgment under appeal, the references to the origin of parts by a reference to where they are from.
B. Assessment
1. Preliminary observations
35. The appeal brought by the Commission, supported by the EBMA, concerns both the General Court’s finding, in paragraphs 107 to 119 of the judgment under appeal, that the Commission erred in law in applying ‘by analogy’ Article 13(2)(b) of the basic regulation to parts purchased in Sri Lanka and the theoretical/interpretive premiss on which that finding is based, namely the General Court’s analysis, in paragraphs 83 and 93 of that judgment, of the rules governing proof of the conditions laid down in Article 13(2) of the basic regulation to establish the existence of assembly operations constituting circumvention practices.
36. Before analysing the arguments relating to the single ground of appeal raised by the Commission against the judgment under appeal, I consider it appropriate to recall some of the principles with regard to the EU rules on circumvention, as set out in the case-law.
2. The EU rules on circumvention in the light of the case-law
37. First of all, it should be noted that the EU rules on anti-circumvention contained in the basic regulation do not have as their basis the 1994 Anti-dumping Code, (13) but have been adopted unilaterally by the European Union. (14) Although the issue of circumvention has been discussed in the context of WTO-GATT negotiations, it has not proved possible to reach agreement within that framework. (15)
38. It follows that the EU rules on circumvention, contained in Article 13 of the basic regulation, constitute a regulatory framework which, although framed by the EU anti-dumping rules, have their own specific characteristics.
39. As regards the objectives of those rules, the Court has already had occasion to clarify that, according to the purpose and scheme of the basic regulation, in particular recital 19 and Article 13 thereof, the sole purpose of a regulation extending an anti-dumping duty is to ensure the effectiveness of that duty and to prevent its circumvention and that, consequently, a measure extending a definitive anti-dumping duty is merely ancillary to the initial act establishing that duty which protects the effective application of the definitive measures. (16)
40. It is therefore in the light of that objective, namely to ensure the effectiveness of the anti-dumping measures adopted by the European Union and to prevent their circumvention, that the EU anti-circumvention provisions must be interpreted.
41. The Court has, subsequently, provided much guidance in its case-law in respect of proof of the four conditions which must be satisfied in order for the existence of circumvention to be established. (17)
42. The Court has stated that it is clear from the basic regulation, and from Article 13(3) thereof in particular, that the burden of proving the existence of circumvention rests on the institutions. Therefore, when deciding to extend to another country anti-dumping duties which they have imposed on imports from a particular country, the institutions have the burden of proving that all the constituent elements of a circumvention of those duties, as mentioned in the third sentence of Article 13(1) of the basic regulation, are present. (18)
43. Although there is no doubt that the burden of proving the existence of circumvention practices falls to the EU institutions, in order to establish the rules regarding the standard of proof of circumvention, two considerations stemming from the case-law must, however, be borne in mind.
44. First, the Court has held that the definition of circumvention contained in Article 13(1) of the basic regulation is set out in very general terms which leave a broad margin of discretion to the institutions. (19) Acknowledging that margin of discretion is, moreover, consistent with the broad discretion which, according to settled case-law, the institutions generally enjoy in the sphere of the common commercial policy, and most particularly in the realm of measures to protect trade, because of the complexity of the economic, political and legal situations which they have to examine. (20)
45. That margin of discretion means, moreover, that the judicial review must be limited to verifying whether the procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers. (21)
46. Secondly, the Court has also emphasised that, in the context of investigations concerning the possible existence of circumvention practices, the EU institutions’ powers are more limited. By contrast to other areas of EU law, such as, for example, in relation to infringements of competition law, those institutions do not have the power to require the exporting producers under investigation to participate in the investigation or to provide information. The institutions are therefore reliant on the voluntary cooperation of the parties concerned to provide them with the necessary information. (22)
47. Moreover, such investigations are normally conducted for the large part in countries outside the European Union and are subject to significant time constraints. In accordance with the second subparagraph of Article 13(3) of the basic regulation, anti-circumvention investigations must be concluded within 9 months.
48. However, the Court has not yet had the opportunity to analyse specifically the rules governing proof of the existence of assembly operations constituting circumvention practices under Article 13(2) of the basic regulation.
49. The only judicial precedent that is relevant in this regard is the judgment in Starway to which, as is clear from point 17 of the present Opinion, the General Court referred in the judgment under appeal as the basis for its interpretation of Article 13(2) of the basic regulation.
50. In the judgment in Starway, the General Court held, in essence, that, in accordance with Article 13(2) of the basic regulation, in order for an assembly operation to be considered to circumvent the anti-dumping measures in force, it is for the EU institutions to demonstrate that the parts constituting 60% or more of the total value of the parts of the assembled product come from the country to which those measures apply. Those institutions, however, are not required to prove that those parts also originate in that country. By contrast, it is for the operator concerned, if it wants its assembly operations not to be regarded as circumvention practices, to provide proof that those parts originated in another country. (23)
3. The interpretation of the term ‘from’ pursuant to Article 13(2)(a) of the basic regulation
51. It is in the light of the principles identified in the case-law and set out in the previous section that the arguments put forward by the Commission, supported by the EBMA, against the judgment under appeal must be analysed. Those arguments concern, first of all, the interpretation adopted by the General Court in the judgment under appeal of the term ‘from’, used in Article 13(2)(a) of the basic regulation.
52. In that regard, I would point out that, under that provision, in order for assembly operations to be considered to be practices to circumvent the anti-dumping measures in force, the parts concerned must, inter alia, be ‘from’ the country subject to the measures.
(a) The General Court’s reasoning in the judgment under appeal
53. As noted in point 18 of the present Opinion, in the judgment under appeal, the General Court, in paragraphs 84 and 85, interpreted the term ‘from’ used in Article 13(2)(a) of the basic regulation, by equating it with ‘imports’.
54. Thus, in the General Court’s interpretation, parts can be regarded as being ‘from’ the country subject to anti-dumping measures, under Article 13(2)(a) of the basic regulation, only if they have been imported from that country. In the case where the parts concerned have been imported — into the country where the assembly operations take place — from a different country, in that case, according to the General Court, the Commission would be able to take account of this in its analysis in accordance with Article 13(2)(b) of the basic regulation in order to establish the existence of assembly operations which circumvent the anti-dumping measure in only two cases: in the case of a mere transshipment of parts via that different (intermediate) country; or where it verifies that, although those parts have been imported from a different (intermediate) country, they originate, in fact, in the country subject to the measures.
55. The General Court’s reasoning therefore prescribes a kind of analysis in two stages which the Commission should carry out for the purposes of determining where the parts concerned are from, pursuant to Article 13(2)(a) of the basic regulation. First, the Commission must determine whether the parts concerned are imported from the country subject to anti-dumping measures. If that is not the case, secondly, the Commission is still entitled to verify that, even though those parts are imported from another country, they do in fact originate in the country that is subject to the measures.
56. In the judgment under appeal, the General Court’s interpretation of the term ‘from’ pursuant to Article 13(2) of the basic regulation had a dual basis. On the one hand, it referred to the fact that several provisions of the basic regulation (24) consistently combine the term ‘from’ with the term ‘imports’, which is confirmed in the analysis of the various language versions of those provisions. On the other hand, it referred to the objective underlying Article 13 of the basic regulation of ensuring that measures to counter circumvention are effective.
(b) The interpretation of the term ‘from’
57. The Commission and the EBMA submit that the interpretation of the term ‘from’ adopted by the General Court is incorrect and contrary to the spirit of the anti-circumvention provisions.
58. In those circumstances, it is necessary to assess whether the interpretation of the term ‘from’ adopted by the General Court in the judgment under appeal is correct.
59. As a preliminary point, I would note, as did the General Court, that the basic regulation does not define the term in question.
60. According to settled case-law, in interpreting a provision of EU law it is necessary to consider not only its wording, but also the context in which it occurs and the objectives pursued by the rules of which it is part. (25)
61. As regards, in the first place, the literal interpretation, I note, first of all, that the wording of Article 13(2)(a) of the basic regulation does not contain any explicit reference to the concept of ‘imports’. Moreover, as is clear from point 56 of the present Opinion, as the basis for its interpretation of the term in question, the General Court, in fact, made no reference at all to the wording of the provision containing the term, but favoured a contextual and teleological approach.
62. In that context, however, I am not sure that the fact that, in the provision in question, as opposed to other provisions of the basic regulation, the legislature decided not to associate the term ‘from’ with the term ‘imports’, supports an interpretation which treats those two concepts as similar.
63. Quite the contrary: where, in the provisions mentioned by the General Court, the basic regulation links those terms, the word ‘from’ serves to explain the word ‘imports’ in so far as it is used to indicate where the imports come ‘from’. However, in Article 13(2)(a) of the basic regulation, the term ‘from’ bears no relationship whatsoever to the term ‘imports’, which is not contained in the provision, but refers to the parts concerned. The term ‘from’ serves to explain the term ‘parts’ and is intended to indicate that, in order to be able to be taken into account in the analysis of the assembly operations, the parts concerned must be specifically ‘from’ the country subject to the anti-dumping measures.
64. In fact, making an artificial association between the concept of ‘from’ and that of ‘imports’, when such an association is not explicitly provided for, is tantamount to limiting the scope of the first of those concepts. From a literal standpoint, in French, the term ‘provenir’ [to be from] means both ‘venir de’ [to come from] and ‘tirer son origine de’ [to originate in]. (26) An interpretation that limits the meaning of that term only to the situation, corresponding to the first meaning, in which the parts physically come directly — thus are imported — from the country subject to measures limits significantly the scope of the concept of ‘from’. An interpretation of that kind excludes all situations, corresponding to the second meaning of the French term ‘provenir’, in which the parts are indirectly from the country subject to measures, namely situations in which, although the parts concerned do not physically come directly from the country subject to measures, they may still be deemed to be from that country.
65. Moreover, the restrictive interpretation of the term ‘from’ adopted by the General Court is contradicted by an analysis of the various language versions of the provision in question, namely Article 13(2)(a) of the basic regulation. The General Court did not carry out that analysis in the judgment under appeal. (27)
66. Although several language versions of that provision use a term which is equivalent to the French terms ‘provenir de’, (28) some language versions, such as the Italian and German versions, refer expressly to the parts originating in ‘the country subject to measures’ (29) and other language versions use terms which appear to be more ambiguous in so far as they can refer to both where the parts are from and where they originate in. (30)
67. It follows from the foregoing that the literal analysis of the provision in question argues more readily against an interpretation that limits the scope of the term ‘from’ merely to ‘imports’ from the last country to export the parts concerned.
68. However, an approach which takes account of the various meanings of the French verb ‘provenir’ and the various language versions of the provision in question argues more readily in favour of a broader interpretation of that concept which goes beyond the concept of ‘imports’ alone and includes the parts concerned being both directly and indirectly from the country subject to anti-dumping measures.
69. In the second place, with regard to the context of the provision in question, it should be noted that, as is clear from points 37 and 38 of the present Opinion, since the EU rules on circumvention contained in Article 13 of the basic regulation do not have as their basis the 1994 Anti-dumping Code, they must be regarded as a specific regulatory framework within EU anti-dumping law.
70. In those circumstances, I consider that, if the General Court wishes to establish the interpretation of Article 13(2) of the basic regulation by reference to other provisions in that regulation, some of which in particular could constitute a transposition into EU law of particular obligations contained in the 1994 Anti-dumping Code, (31) it must explain the reasons why that reference is justified, something which the General Court did not do in the present case.
71. Therefore, that consideration also argues against the reasoning adopted by the General Court to justify equating the term ‘from’ with ‘imports’.
72. In the third place, the restrictive interpretation of the term ‘from’ adopted by the General Court in the judgment under appeal, in my view, is also not consistent with the objective of EU rules on anti-circumvention which, as is clear from points 39 and 40 of the present Opinion, is to ensure the effectiveness of the anti-dumping measures adopted by the European Union and to prevent their circumvention.
73. In that regard, it should be noted that, as I stated in point 1 of this Opinion, in the current economic reality, characterised by the globalisation of international trade and increased opportunities to relocate the production of goods, and particularly low-tech products, it has become relatively straightforward to implement more and more complex forms of circumvention. In that context, it is essential for the European Union to have trade defence instruments which are able to respond effectively to such challenges by ensuring that EU industry enjoys effective protection against imports of dumped products. It is from that perspective that the anti-circumvention provisions laid down in Article 13 of the basic regulation must be interpreted.
74. In that context, I note that the interpretation of the term ‘from’ pursuant to Article 13(2)(a) of the basic regulation adopted by the General Court allows the Commission to rely solely on the fact that there has been a physical movement (namely the mere importation) of parts from the country subject to measures to the country of assembly in order to consider that the parts are ‘from’ the first country.
75. It is true, as the General Court notes in paragraph 85 of the judgment under appeal, that such an approach simplifies the proof of the condition regarding where goods are ‘from’ in the event of circumvention by the assembly of parts which might be defined as ‘traditional’, namely where the parts that are ultimately assembled to make the final product are imported directly from the country subject to measures.
76. In such cases, the consequence of that interpretation is the mere finding by the Commission that the importation of parts from the country subject to measures gives rise to a form of presumption that they are ‘from’ that country, which may potentially be rebutted by the operators concerned. (32)
77. However, the situation is completely different in the case of ‘complex’ circumvention practices comprising successive or multiple assemblies which take place in various countries. Such practices must also come within the scope of the anti-circumvention rules laid down in Article 13 of the basic regulation.
78. Unlike in the case of ‘traditional’ assembly operations, in the case of ‘complex’ circumvention practices, the interpretation of the term ‘from’ adopted by the General Court has the effect of creating a sort of presumption that — pursuant to Article 13(2)(a) of the basic regulation — the parts concerned are ‘from’ the importing country. This means that, in accordance with the two-stage approach adopted by the General Court, in such cases, even where there are strong indications which may raise legitimate suspicions as to the existence of circumvention practices, the burden of establishing (33) the origin of those parts falls to the EU institution and not the operators concerned.
79. Such an approach entails a significant increase in the burden of proof that falls to the EU institutions in order to prove the existence of circumvention practices consisting in complex assembly operations. It is, in addition, contrary to the approach adopted in the judgment in Starway, to which the General Court itself referred. (34)
80. In my view, an interpretation which results in a considerable increase in the burden of proving the existence of circumvention that falls to the EU institutions cannot be regarded as being consistent with the objective of ensuring effectiveness which underlies the anti-circumvention rules recalled in points 39, 40 and 72 of the present Opinion. That conclusion must also be drawn in the light of the considerations regarding the nature of anti-circumvention investigations and the EU institutions’ powers in that connection set out in points 46 and 47 of the present Opinion.
81. Furthermore, and in the fourth place, as the Commission has rightly pointed out, an interpretation of Article 13(2) of the basic regulation which places the burden of establishing the origin of imported parts on the EU institutions appears to be contrary to the legislature’s intention of waiving the requirement for the institutions to prove the origin — in the technical sense under customs law — of the parts concerned by the operation assemblies. Although, initially, the EU anti-circumvention rules provided for the possibility of extending definitive anti-dumping duties in the case of the assembly of ‘parts … originating in the country of exportation of the product subject to the anti-dumping duty’, (35) since the adoption of Regulation (EC) No 3283/94, (36) the term ‘origin’ has been replaced, in the provision concerning assembly operations, by the term ‘from’, as a result of which it may reasonably be considered that such an amendment reflects the legislature’s intention to abandon the concept of ‘origin’ in the technical sense in that context (37) and to amend, in so far as that aspect is concerned, the conditions for the purposes of determining the existence of circumvention operations. (38) It follows that, following the entry into force of those new rules, which were confirmed in the version of the basic regulation which applies in the present case, the EU institutions are no longer required to establish the ‘origin’ of the parts, in the technical sense under customs law, but must, solely, demonstrate that they are from the country subject to measures, which implies that the term ‘from’ must be understood in a more flexible and broader sense than ‘origin’. (39)
82. To conclude, it follows from all of the foregoing considerations that, in my opinion, the restrictive interpretation of the term ‘from’ pursuant to Article 13(2)(a) of the basic regulation adopted by the General Court in paragraphs 84 and 85 of the judgment under appeal, which equates that term with the concept of ‘imports’, is incorrect.
83. By contrast, I consider that it is clear from a literal, contextual, teleological and historical interpretation of that provision that the terms ‘from the country subject to measures’ must be interpreted broadly as meaning that the term ‘from’ covers the fact that the parts concerned are both directly and indirectly from that country.
4. The rules governing proof of the existence of circumvention practices consisting in assembly operations under Article 13(2) of the basic regulation
84. In the judgment under appeal, it is on the basis of the interpretation of the term ‘from’ and the resulting distinction between, on the one hand, where the parts concerned are from, on the basis, according to the General Court, of the importation and, on the other, the origin of those parts, that the Commission should possibly verify that the General Court based its determination of the rules governing the proof that the EU institutions must provide in order to establish the existence of circumvention practices consisting in assembly operations under Article 13(2) of the basic regulation.
85. In its appeal, the Commission, supported by the EBMA, also disputes that aspect of the judgment under appeal.
86. In that regard, I note, first of all, that, as is clear from points 41 and 42 of the present Opinion, the Court has already stated that the burden of proving the existence of circumvention rests on the EU institutions. That said, it should, however, be verified how that burden of proof must apply in concreto and what standard of proof is required from the institutions in the different circumstances which may arise.
87. In that context, I consider it necessary to draw a distinction between two types of cases: on the one hand, cases, which I have termed ‘traditional’ circumvention, namely those in which the parts concerned — which are ultimately assembled to make the final product — come directly from the country subject to anti-dumping measures and, on the other, cases of ‘complex’ circumvention operations, comprising successive or multiple assemblies which take place in one or several different countries and in which the parts concerned come indirectly from the country of assembly.
88. In the first type of cases, in order to prove that the parts concerned come directly from the country subject to measures, it is, in my opinion, sufficient, as the General Court held in the judgment under appeal and as is clear from points 74 to 76 of the present Opinion, for the Commission to establish that the parts concerned have been imported from the country subject to anti-dumping measures. In such a case, once it has been established where those parts are directly from, it will still be possible for the operators concerned to rebut the presumption of direct provenance resulting from the parts being imported from the country subject to measures by demonstrating that, in fact, the parts in question originated in another country. (40)
89. Such a determination of the rules governing proof in that type of case is, in my opinion, wholly consistent with the objective of ensuring that the anti-circumvention rules are effective.
90. In the second type of cases, however, namely where the institutions are faced with the parts concerned being indirectly from the country subject to measures, apart from the case of a mere transshipment of parts for the intermediate country, proving the existence of complex circumvention practices consisting in multiple assembly operations may not be as immediate.
91. However, if it is proven during the course of the investigation that, although the parts which are ultimately assembled to make the final product have been imported from a country other than the one subject to measures, they are in fact made up, for a significant part, of parts which were originally produced in the country subject to measures or which were produced using, for a significant part, components or materials which originated in that country, the standard of proof that must be met by the Commission in order to find that circumvention operations exist may, in my opinion, be reduced.
92. In such circumstances, it is, in my view, reasonable to allow the Commission to rely on a ‘body of consistent evidence’ (41) to establish that those parts are indirectly from the country subject to measures pursuant to Article 13(2)(a) of the basic regulation in order to take them into account in its analysis in accordance with Article 13(2)(b) of that regulation. The existence of links between the companies involved in the different stages of the production chain, the participation of some of those companies in previous circumvention practices and indications of a low value being added during intermediate assemblies are examples of indications which, in such a situation, may be taken into account by the Commission in its analysis to determine where the parts concerned are indirectly from.
93. In that situation, once the Commission has determined on the basis of a ‘body of consistent evidence’ that the parts concerned are indirectly from the country subject to measures pursuant to Article 13(2)(a) of the basic regulation, the operator concerned will still have the possibility to prove that, although those parts, which are imported from an intermediate country, are made up, for a significant part, of parts originating in the country subject to measures or have been produced using, for a significant part, components or materials which originated in that country, and notwithstanding the presence of significant indications which support clearly the suspicion that circumvention exists, those parts in fact originate in the intermediate country or, as the case may be, a different country. To that end, that operator may, for example, provide reliable certificates attesting that the parts in question originate in the intermediate country. He may also prove that, in the intermediate country, those parts actually underwent substantial processing which changed their nature and that there were objective economic reasons for that intermediate processing which justified having a production chain in several countries.
94. Such clarification of the rules governing proof in the case of multiple assembly operations enables, in my view, compliance with the principle that it is for the EU institutions to prove the existence of circumvention practices, whilst, at the same time, being consistent with the objective of ensuring that the anti-circumvention rules are effective. It also takes account of the specific nature of the EU institutions’ powers in connection with anti-circumvention investigations and the time constraints to which they are subject in such investigations, as noted in points 46 and 47 of the present Opinion.
95. However, the two-stage approach advocated by the General Court and described in points 54 and 55 of the present Opinion is based on an incorrect interpretation of Article 13(2) of the basic regulation.
5. Conclusion
96. The determination of the rules governing proof of circumvention resulting from the — in my view, incorrect — interpretation of the term ‘from’ adopted in the judgment under appeal forms the basis of all of the reasoning which led the General Court to conclude that the Commission had committed an error of law and that, consequently, the regulation at issue had to be annulled. According to the General Court, since the parts concerned had been imported from — and, therefore, in its view, were ‘from’ — Sri Lanka, the Commission was required to verify that those parts originated in China if it wished to take them into account in its analysis of assembly operations under Article 13(2)(b) of the basic regulation. Therefore, by verifying that those parts originated in China, it is said to have erred in law in so far as it used, for that purpose, ‘by analogy’, the criteria provided for in Article 13(2)(b) of the basic regulation.
97. It follows that the error on the part of the General Court in the interpretation of the term ‘from’ has resulted in the General Court incorrectly determining the rules governing proof to determine the existence of complex circumvention practices by means of assembly under Article 13(2) of the basic regulation. That determination forms the basis of the General Court’s finding that the Commission had erred in law.
98. In those circumstances, it must be concluded that the judgment under appeal is vitiated by a number of errors of law in the interpretation of Article 13(2) of the basic regulation which undermine the foundations of the conclusion reached by the General Court in that judgment. It follows, in my view, that the appeal brought by the Commission, supported by the EBMA, must be upheld and that, consequently, the judgment under appeal must be set aside. (42)
VI. The action at first instance
99. In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, where the Court sets aside the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits. I consider that to be the position in the present case.
100. In support of its action at first instance, Kolachi raised a single plea in law, alleging the infringement of Article 13(2)(b) of the basic regulation. In essence, Kolachi complained that the Commission, first, applied that provision to manufacturing operations in Sri Lanka, whereas the investigation concerned the alleged circumvention by means of assembly in Pakistan, secondly, committed an error of law in treating that provision as a rule of origin and, thirdly, did not take any steps to apply the rules of origin prescribed by EU customs legislation.
101. In that regard, it should first be noted that, according to the information supplied by Kolachi itself during the investigation, 93% of the parts used to assemble the bicycles in Pakistan had been supplied by way of Flying Horse. Those parts had been imported in part — representing 46% of the total parts assembled — from China and in part — representing 47% of the total parts assembled — from Sri Lanka. The investigation showed that the majority of the parts imported from Sri Lanka that were purchased from Flying Horse, namely the frames, forks, alloy rims and plastic wheels, had in fact been produced by Great Cycles using, for a quite significant part, Chinese materials. Moreover, the investigation revealed that Great Cycles was a company related to Kolachi, which had previously been involved in circumvention operations. As is apparent from recital 99 of the regulation at issue, the Commission also found that there were doubts as to the relationship between Flying Horse and Kolachi. All of those circumstances are proven and have not been disputed by Kolachi. At the hearing before the Court in response to specific questions that had been put to it, Kolachi even explicitly confirmed that the parts worked in Sri Lanka had been ‘converted’ from parts of Chinese origin.
102. Recitals 98 to 101 of the regulation at issue, in which the Commission found that Kolachi was involved in assembly operations constituting circumvention practices in accordance with Article 13(2) of the basic regulation, must be assessed in the light of the findings of the investigation.
103. It is clear from recitals 98 and 99 of that regulation that the Commission concluded that, although the parts that Kolachi purchased from Flying Horse had been imported from Sri Lanka, in reality, they came (indirectly) from China, within the meaning of Article 13(2) of the basic regulation, on the basis of the following factors: first, the finding that Kolachi had not succeeded in demonstrating that those parts were of Sri Lankan origin (43) and, secondly, a number of indications which cast doubt on the relationship between Flying Horse, which acted as an intermediary for a company that was related to Kolachi — namely Great Cycles — and Kolachi itself. On the basis of those factors, the Commission concluded, in the final sentence of recital 99 of the regulation at issue, that the criteria of Article 13(2)(b) of the basic regulation had been satisfied in that case.
104. It is only in response to an argument put forward by Kolachi, as summarised in the final sentence of recital 100 of the regulation at issue, which complained that the Commission had used Article 13(2)(b) of the basic regulation as a rule of origin, that the Commission, in the final sentence of recital 101 of the regulation at issue, after having noted ‘that Article 13(2)(b) of the basic regulation is indeed not as such a rule of origin’, considered that it was justified ‘in considering that, as these parts were manufactured for more than 60% with raw materials from China and the value added was less than 25% of the manufacturing costs, it could conclude that these parts themselves come from China’.
105. In the light of all of the information arising from the investigation and a reading of the regulation at issue, I consider, first, that, in accordance with the rules governing proof of the existence of ‘complex’ assembly operations that I proposed in points 91 to 93 of the present Opinion, the Commission may well have concluded, in the present case, that the parts that were purchased from Flying Horse and imported from Sri Lanka, but were produced by Great Cycles, came indirectly from China. First, there was evidence that those parts had been produced in Sri Lanka using, for a quite significant part, Chinese components and materials. Secondly, the Commission had a body of consistent evidence which supported clearly the suspicion that Kolachi was involved in complex circumvention operations. In that context, in accordance with those rules governing proof, it fell to Kolachi to prove that the parts concerned originated in Sri Lanka, something which, unquestionably, that company failed to do.
106. It follows, secondly, that, in those circumstances, in order to determine that those parts came indirectly from China, the Commission was not in any way required to verify their origin by applying any of the rules of origin under customs law or by applying ‘by analogy’ the criteria in Article 13(2)(b) of the basic regulation as a rule of origin.
107. Thirdly, in my opinion, it is clear from reading the relevant recitals of the regulation at issue that the Commission, in any event, did not use ‘by analogy’ the criteria in Article 13(2)(b) of the basic regulation as a rule of origin in order to determine that the parts concerned came indirectly from China. The finding that those parts are indirectly from China follows from the unequivocal conclusions that the Commission drew in the final sentence of recital 98 and the penultimate sentence of recital 99 of the regulation at issue on the basis of the significant indications which it had. The fact that the Commission, in response to a specific argument put forward by Kolachi, also found that the criteria in Article 13(2)(b) of the basic regulation were also satisfied in respect of the parts at issue that were worked in Sri Lanka, is merely an additional indication to substantiate the conclusion that the Commission had already reached and it was for Kolachi, as appropriate, to rebut that finding by presenting reliable evidence that those parts were of Sri Lankan origin.
108. It follows from all of the foregoing considerations that, in my opinion, the three complaints in the single plea in law raised by Kolachi must be rejected and that, consequently, the action for annulment brought by Kolachi must be dismissed in its entirety.
VII. Costs
109. Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs. Under Article 138(1) of those rules, which apply to the procedure on appeal pursuant to Article 184(1) of those rules, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
110. If the Court agrees with my assessments concerning the Commission’s appeal, the unsuccessful party will be Kolachi. In those circumstances, since the Commission and the EBMA have claimed that Kolachi should be ordered to pay the costs, I propose that the Court order Kolachi to pay the costs incurred both at first instance and in the present appeal by the Commission and the EBMA.
VIII. Conclusion
111. In the light of the foregoing considerations, I propose that the Court:
(1) Set aside the judgment of the General Court of the European Union of 10 October 2017, Kolachi Raj Industrial v Commission (T‑435/15, EU:T:2017:712);
(2) Dismiss the action for annulment brought by Kolachi Raj Industrial (Private) Ltd before the General Court in Case T‑435/15;
(3) Order Kolachi Raj Industrial (Private) Ltd to pay the costs incurred at first instance and in the appeal proceedings by the European Commission and the European Bicycle Manufacturers Association (EBMA).