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China Trade Issues Hot Topic this Spring

Laws & Regulations

BRUSSELS, Belgium – This spring the European Commission has to conclude three trade issues with China for bicycles which are currently under investigation. As the outcome of these investigations could have a big impact on the bike sector in Europe, we made an overview on what’s to come the next few months.

China Trade Issues Hot Topic this Spring
For the investigation, the Customs authorities must now register bicycle imports into the EU from Indonesia, Malaysia, Sri Lanka and Tunisia for a period of 9 months, i.e. until 26 June 2013.

In 2011, the European Union renewed the (48.5%) anti-dumping duties on imports of Chinese bicycles for the third time. The duty was first introduced in 1992 and shall thus go into its 20th anniversary this year. In the meantime however, the European Union is carrying out no less than 3 additional investigations into Chinese bicycle imports.

Interim review investigation
Only 5 months after having reaffirmed the anti-dumping duties against Chinese bicycle imports (October 2011), the European Commission initiated an interim review of these measures. The main reason for this review was that the Commission had found that the circumstances on which the measures were based, had changed.

The Commission explicitly mentioned the abolition of the export quota system in January 2011, which until then stood in the way of market economy treatment for Chinese companies.

Increase of European producers
Secondly, the Commission had found a considerable change in the European bicycle industry, switching from complete production to the assembly of imported parts. Thirdly, the EU enlargement to 27 member states resulted in a significant increase of European producers. Moreover, producers from ‘old’ member states moved to or set up new facilities in those new member states. The Commission pointed out that this could have changed the cost level in the EU industry.

Fourthly, the level of injury had been calculated on the basis of steel bicycles, whereas today most bicycles are alloy. And finally, the number of companies exempted from anti-circumvention is increasing to a point that the system becomes too complex and burdensome to remain effective.
The review investigation is thus determining whether the existing anti-dumping measures need to be continued, removed or amended. The investigation must be completed before 9 June 2013.

Anti-subsidy investigation
It is probably on the rebound of the above investigations that the European Bicycle Manufacturers Association (EBMA) lodged two new complaints. On 27 April 2012, the Commission published a notice of initiation of an anti-subsidy proceeding. EBMA alleges that Chinese bicycle manufacturers have benefitted from a variety of government subsidies.

Still according to EBMA, the subsidies are specific and countervailable  because they are contingent upon export performance and/or the use of domestic rather than imported goods and/or limited to certain types of enterprises and/or regions.
The investigation should be completed before 27 May 2013. If the facts show the existence of countervailable subsidies, which result in injury, the EU will impose a countervailing duty.

Circumvention investigation
On 25 September 2012, following another EBMA complaint, the Commission announced an investigation of possible circumvention through Indonesia, Malaysia, Sri Lanka and Tunisia. EBMA’s complaint appears to show that, since the duty, the trade pattern of exports involving China and the 4 countries mentioned above have significantly changed. According to the Commission, this change appears to result from transhipments of Chinese bicycles via these countries.
For the investigation, the Customs authorities must now register bicycle imports into the EU from the 4 countries for a period of 9 months, i.e. until 26 June 2013. That same date is the deadline for the investigation.

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