Opinion of the Advocate-General
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My Lords,
The legal framework and the procedure
For the legal framework and an outline of the procedure in this case I refer to my Opinion in Joined Cases 260/85 and 106/86 Tokyo Electric Company v Council ( TEC ).
Sharp Corporation of Japan (" Sharp ") is a Japanese company which manufactures inter alia calculators, office copiers and cash registers . Sharp began to produce and market electronic typewriters in 1982 . It did not, at least during the relevant period, market them in Japan but manufactured them exclusively for export . Its electronic typewriters are imported for sale and distribution in the United Kingdom and Ireland by its subsidiary Sharp Electronics ( UK ) Ltd (" Sharp UK ") and for sale and distribution in the continental Member States by its subsidiary Sharp Electronics ( Europe ) GmbH (" Sharp Germany ").
The Provisional Duty Regulation imposed a provisional duty of 21.1% on Sharp . The Definitive Duty Regulation required the provisional duty to be definitively collected at that rate and imposed a definitive duty at the rate of 32 %.
By an application lodged on 7 October 1985 Sharp brought an action against the Council claiming that the Court should :
( 1 ) declare the Definitive Duty Regulation void;
( 2 ) alternatively declare the said regulation void in so far as it affects Sharp;
( 3 ) further or alternatively declare the said regulation void :
( a ) in so far as it purports to impose a definitive anti-dumping duty of 32% upon electronic typewriters originating in Japan and manufactured or exported by Sharp, or
( b ) in so far as it purports to do so in respect of the period until, if ever, effective measures are taken by the institutions to bring to an end the discrimination against Sharp relative to Nakajima created by the contested regulation;
( 4 ) further or in the further alternative, to declare the said regulation void in so far as it purports to order that the amounts secured by way of provisional duties in respect of such electronic typewriters manufactured by Sharp and exported to the Community should be definitively collected
( a ) at all; or
( b ) to the extent that the amounts exceed duty calculated at a rate of 16.08%;
( 5 ) in any event order the Council to pay Sharp' s costs;
( 6 ) order such other relief as may be lawful or equitable in all the circumstances .
The Council asks the Court to dismiss the application and to order Sharp to pay the costs .
The Commission and Cetma have intervened in support of the Council .
Sharp adduces five grounds in support of its claim . They are :
( 1 ) wrongful construction of normal value by inclusion of a profit margin on cost of 47.91%,
( 2 ) failure to calculate normal value on an ex-factory basis and wrongful comparison of normal value not so calculated with export price so calculated,
( 3 ) wrongful deduction from the export price in respect of credit granted by Sharp Germany,
( 4 ) discrimination in comparison with Nakajima, and
( 5 ) wrongful collection of the provisional duty at the rate of 21.1 %.
Ground 1 : Wrongful construction of normal value by inclusion of a profit margin on cost of 47.91%
By its first ground of annulment, Sharp argues that the use of another supplier' s alleged profit margin of 32.39% on sales ( 47.91% on costs ) as a profit margin in the construction of the normal value of Sharp' s electronic typewriters ( a ) when combined with use of the applicant' s own costs, was manifestly inappropriate since one cannot divorce, as the approach underlying the contested regulation does, the profit margin that a supplier could expect to earn from that supplier' s own costs and the prices that its products could expect to command, and ( b ) infringes the principle of legal certainty since use of that approach makes it impossible for exporters to know what they need to do in order not to be liable to be held to have dumped their products in the Community .
The detailed arguments in support of these contentions, which are summarized in the report for the hearing, in my view fail for the reasons given in my Opinions in TEC and in Joined Cases 277 and 300/85 Canon v Council .
Ground 2 : Failure to calculate normal value on an ex-factory basis and wrongful comparison of normal value not so calculated with export price so calculated
By its second ground of annulment Sharp argues that the reason given by the Commission and Council as to why, when constructing normal value, they did not allow the entire costs of Sharp' s Japanese domestic sales company was that "the composition of the categories of customers is similar for both domestic and export sales . Therefore no adjustments could be granted ". That reasoning was doubly defective, at least in Sharp' s case . First, even if the categories of domestic and export customers were similar, that would provide no reason for including in normal value some of the domestic sales company' s costs and excluding from the export price all of the European sales companies' costs . Secondly, since Sharp, and therefore its domestic sales company, made negligible domestic sales of electronic typewriters ( which was the very reason why normal value had to be constructed for Sharp ) there was no "category of (( domestic )) customers" and, a fortiori, "the composition of the categories of customers" could not, as alleged in Recital 25, be "similar for both domestic and export sales ". Accordingly, the reason given in Recital 25 to the Definitive Duty Regulation for rejecting this claim by Sharp was manifestly unfounded and defective . In Sharp' s submission the resulting comparison of export price and normal value was an improper comparison, was not at the same level of trade and was not a fair comparison as required by Article 2 ( 9 ) of the Basic Regulation .
Those arguments, in my opinion, fall to be rejected for the reasons given in my Opinions in TEC and Canon .
Ground 3 : Wrongful deduction from the export price in respect of credit granted by Sharp Germany
By its third ground of annulment, Sharp argues that in accordance with Article 2 ( 8 ) ( b ) of the Basic Regulation the Commission should have constructed the export price, not on the basis of the value to the customer of borrowing in his national currency, but on the basis of costs incurred by Sharp Germany of borrowing in German marks ( or by the costs which would have been incurred by the customers in other Member States borrowing in German marks, which would have been the same ).
The text of Article 2 ( 8 ) ( b ) of the Basic Regulation does not make any express provision in regard to the question raised by Sharp . On the one hand, it is true that it refers to "all costs incurred between importation and resale" and to "ancillary costs"; but on the other hand, its purpose is to provide for the construction of an export price . Bearing this purpose in mind, I consider that there is force in the argument that the crucial question is the value of credit to the buyer, not the cost of credit to the seller, because under Article 2 ( 8 ) ( b ) of the Basic Regulation the issue is the effective price of the goods to the first independent buyer . On this view, the cost of credit to the seller is irrelevant . I consider that it was within the powers of the Community authorities to use for this purpose the rates for national currency prevailing in the Member States where the buyers were established, there being no evidence that the buyers would have borrowed in German marks rather than - as normally - in the currency of their own Member State if they had needed to raise their own credit . Accordingly, I would reject Sharp' s third ground of annulment .
Ground 4 : Discrimination in comparison with Nakajima
By its fourth ground of annulment, Sharp argues that the Council decided to adopt the Definitive Duty Regulation and impose anti-dumping duties on Sharp and other exporters without at the same time imposing at least a provisional duty on Nakajima All Co . Ltd . (" Nakajima ") which was based on the same new approach as to profit margin as that used to calculate the definitive anti-dumping duty for Sharp .
In my opinion, this argument by Sharp is misconceived : If an exporter is dumping, it is dumping, and it cannot exculpate itself by pointing to another exporter which may or may not be dumping . For this reason, as I elaborated in my Opinion in TEC, I consider that Sharp' s fourth ground of annulment should be rejected .
Ground 5 : Wrongful collection of the provisional duty at the rate of 21.1%
By its fifth ground of annulment Sharp argues that the Council ought not to have ordered definitive collection from Sharp of provisional duty at a rate in excess of such reduced figure ( namely 16.08 %) as took into account the identified arithmetical error in the original calculation .
The Commission has admitted that there was an error as alleged . It has stated : "For the provisional determination, the Commission had calculated the margin of dumping on Sharp' s sales to the following countries : Belgium, Denmark, the Netherlands, Italy, Ireland, France and Germany . Sales to all countries were made in German marks except the United Kingdom and Ireland, where it was in pounds sterling . Thus, the margin of dumping was in all cases expressed in German marks except for the United Kingdom and Ireland . In order to establish a weighted average percentage dumping margin ... the margin of dumping found for the United Kingdom and Ireland ought to have been converted into German marks . This conversion was omitted . Thus each pound sterling was treated in the final calculation as one German mark, leading, of course, to an incorrect result ." Moreover, the Commission and Council have not contested the figure of 16.08% calculated by Sharp .
When Sharp pointed out the error to the Commission, the latter replied by a letter dated 7 February 1985 : "The Commission does not intend to modify the provisional duty in view of the calculating error referred to by Sharp . In fact, it has come to light that there are two more calculation discrepancies, this time disadvantageous to Sharp, which will equally be taken into consideration for a final determination ". The Court has not been informed what those other "calculation discrepancies" consisted of or how large they were . On the basis indicated, however, the Commission imposed the provisional duty of 21.1 %.
The Council has stated, and Sharp has not, as I see it, contested, that both sets of errors were taken into consideration for the final determination, as the Commission had announced in its letter . The final determination established a substantially higher dumping margin than the Provisional Duty Regulation had found ( 52.98 as against 21.1 %). It also found that Sharp' s dumped imports had been causing injury to the Community industry at 32.38% which, as the lower of the two figures, determined the rate of the definitive duty at 32 %.
In my opinion, the error complained of was taken into account in the Definitive Duty Regulation . Since the definitive findings justified a higher duty than that imposed provisionally ( 32 as against 21.1 %), the Community authorities were under no obligation to collect less than the original rate of provisional duty .
Sharp also argues that it could have brought a successful action for the annulment of the Provisional Duty Regulation to the extent of the arithmetical error but refrained from doing so on the undertaking by the Commission that the arithmetical error would be taken into account at the definitive stage .
It is apparent from the text of the Commission letter, cited above, that the Commission did not undertake that the provisional duty would be collected at less than the full rate ( 21.1 %). It only stated that the error complained of by Sharp would be taken into consideration for a final determination along with other errors having the opposite effect, and that was done . There is nothing there to give rise to any legitimate expectation on the part of Sharp or any estoppel against the Community authorities . Furthermore, I do not accept that an action brought against the Provisional Duty Regulation would necessarily have been successful since the extent of the other "calculation discrepancies" is not known to the Court .
Therefore I consider that Sharp' s fifth ground of annulment falls to be rejected .
Accordingly, in my opinion, the present application should be dismissed and Sharp ordered to pay the costs of the Council, the Commission and Cetma .
Full & Egal Universal Law Academy