European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

The calculation of constructed normal value includes selling, general and administrative costs - the so-called SG and A expenses -. Only the expenses, which concern operational activities related to the production and sales of the product concerned, are to be included in the calculation of constructed normal value . This is the case for advertising  or delivery  costs, or an import duty of 35% on  …

SG and A expenses

The calculation of constructed normal value includes selling, general and administrative costs - the so-called SG and A expenses -. Only the expenses, which concern operational activities related to the production and sales of the product concerned, are to be included in the calculation of constructed normal value . This is the case for advertising  or delivery  costs, or an import duty of 35% on the value of the items imported that should have been included in the manufacturing costs , but this does not include costs already covered by the cost of raw materials . 

The selling, general and administrative costs incurred for the sales of the product concerned on the domestic market of the exporting country are generally based on actual data pertaining to production and sales of the like product in the ordinary course of trade. Where this calculation is impossible on this basis, it may be determined on the following three bases (Regulation No 2016/1036, Article 2(6)): 

- weighted average of the actual amounts determined for other exporters or producers subject to investigation (a) ;

- actual amounts that the exporter or producer in question has incurred or obtained for the same general category of products (b) ;

- any other reasonable method, provided that the amount for profit so established does not exceed the profit normally realized by other exporters or producers on sales of products of the same general category (c) . This is the case where actual data are not reliable because the mark-up on sales (30%) does not correspond to the addition of SG&A reported rate (7.24%) and the profit rate (4.15%) and some expenses have been omitted from the declaration of SG&A expenses . In particular, profitable sales from the domestic market to another country may be retained as calculation basis where it is the only market covered by the pending proceedings for which profitable sales of like products have been made in representative quantities . In the absence of reliable and verifiable data, the Commission may even use data relating to products of another category .

Calculation methods apply following the order in which they are mentioned in the regulation.

Council Regulation (EU) No 1050/2002 of 13 June 2002, imports of recordable compact disks (Taiwan), LawLex200900002510JBJ.

Council Regulation (EU) No 1048/90 of 25 April 1990, imports of small-screen color television receivers originating in the Republic of Korea and collecting definitively the provisional duty, LawLex200900002420JBJ.

See Case T-410/06 Foshan City Nanhai Golden Step Industrial v Council [2010] ECR I-91, Summ. pub., LawLex201100000239JBJ, which accepts the calculation of the SG&A expenses for footwear from data relating to chemical and engineering product sectors. The Commission has chosen that other market because undertakings are comparable in size to that of the applicant, do not incur particularly high selling or general costs and have also obtained market economy treatment during recent investigations.

Case T-48/96 Acme v Council [1999] ECR II-3089, LawLex200900001379JBJ.

Council Regulation (EU) No 2398/97 of 28 November 1997, imports of cotton-type bed linen (Egypt, India, Pakistan), LawLex200900002459JBJ.

Commission Regulation (EC) No 1742/2000 of 4 August 2000, imports of certain polyethylene terephthalate (PET) (India, Indonesia, Malaysia, Korea, Taiwan, Thailand), LawLex200900002850JBJ, which uses the weighted average SG&A expenses of other companies having made sufficient sales in the course of ordinary trade in the country concerned, where the total volume of domestic sales of the company concerned is not representative (&lt; 5%) with respect to the volume of export sales to the Union; Council Regulation (EU) No 1763/2002 of 30 September 2002, imports of sacks and bags made of polyethylene or polypropylene (India), LawLex200900002560JBJ, which constructs normal value from the weighted average of the actual amounts determined for the other three companies subject to investigation having a representative volume, where the company concerned has not a representative volume of domestic sales (5%).

Council Regulation (EU) No 1995/2000 of 18 September 2000, imports of solutions of urea and ammonium nitrate (Algeria, Belarus, Lithuania, Russia, Ukraine, the Slovak Republic), LawLex200900002574JBJ, which considers that in the absence of product concerned sold on the domestic market and where there are no other producers from the exporting country whose SG&A expenses could have been used, the amount of these expenses for the only producer involved may be determined for the same general category of products, possibly from its verified accounts if the disclosed information is incomplete or incorrect.

Commission Regulation (EC) No 1628/2003 of 17 September 2003, imports of large rainbow trout (Norway, Faeroe Islands), LawLex200900002635JBJ, considering that in the absence of a domestic market for the product in question or for the same general category of product, the construction of normal value from SG&A expenses, corresponding to domestic sales of companies of a third country producing and selling the same general category of produces in the recent past, constitutes the most reasonable method as the same product and sales structure in that country is also carried out by integrated companies in that country.

See also Commission Regulation (EC) No 1628/2003 of 17 September 2003, imports of large rainbow trout (Norway, Faeroe Islands), LawLex200900002635JBJ, taking into account the similar character of the production and sales structure by integrated companies; No 967/2000 of 8 May 2000, imports of hairbrushes (China, Korea, Taiwan, Thailand, Hong-Kong), LawLex200900002873JBJ, considering that in the absence of domestic sales of the only exporting producer who cooperated or data regarding the general category of products for the company concerned and the country of origin, the SG&A expenses may be based on the representative domestic sales of the producer of a third country having sold on the domestic market in the ordinary course of trade.

European Business Law

406. SG and A expenses

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406. SG and A expenses

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise