E-Bike Dumping Case: Giant China Seen as State Subsidized by EU
BRUSSELS, Belgium – The European Union Commission has published what it calls a ‘MET Disclosure Document’. This stands for “Assessment of Market Economy Treatment” and is related to the dumping case on e-bikes imported from China. The AD643 Document stipulates that all six Giant companies in China are refused Market Economy Treatment (MET) as, in effect, they are considered to be state subsidized.
All six Giant companies in China have been part in the EU Commission’s investigation on dumping of e-bikes by Chinese exporters. As one Chinese sampled exporting producer involved in this proceeding Giant China has claimed market economy treatment. On May 3 the EU Commission published its verdict on that claim by Giant. This AD643 MET document (published at the bottom of this page) is of particular importance considering the dumping case on e-bikes imported from China because it offers clarity about whether or not there is state interference by the Chinese State. If there is state interference, it’s one of the bases for admissibility and the enforcing of anti-dumping and anti-subsidy duties.
‘Finding of interference of the Chinese State’
The EU Commission’s document says on Giant, which operates six subsidiaries in China, “The investigation (on MET, ed) was initiated on 20 October 2017. One of the four sampled Chinese exporting producers, Giant Electric Vehicles (Kunshan) Co., Ltd. and its related companies, claimed Market Economy Treatment. This claim was verified together with their questionnaire reply in March 2018. Based on the findings for these legal entities, the Commission has concluded that the Giant Group failed to demonstrate that it fulfils the MET criteria. The Commission found that the Chinese government manipulates aluminium prices, which distorts that market, benefitting downstream users of primary aluminium, which have access to a large supply at more or less consistently lower input prices than their overseas competitors. The differentiation in export taxes for aluminium and downstream products such as e-bikes strengthens the finding of interference of the Chinese State on the domestic market.”
In addition, states the AD643 MET Document, the Giant Group benefitted from several preferential taxes schemes, refunds, financial incentives, and special deductions for expenses incurred. These advantages are considered as significant distortions carried over from the nonmarket economy system. The Commission found that these distortions, in particular in combination, provide significant financial benefits and, thus, the Group has failed to demonstrate that its costs and financial situation are not subject to distortions carried over from the former non-market-economy system.
Implications for anti-subsidy investigation
Based on these investigation findings Giant China has been refused Market Economy Status. This could also have further implications. In particular for the investigation into illegal subsidy schemes which is running parallel with the anti-dumping investigation. It means that, next to a definitive anti-dumping duty Giant China could also be convicted to paying an anti-subsidy duty by next January 2019. The combination of both duties would effectively kill Giant’s e-bike export from China to Europe. According to the European Bicycle Manufacturers’ Association (EBMA) that export by Giant China totaled close to 47,000 e-bikes in 2016. EBMA’s export data is based on China Customs’ statistics which, according to industry peers from China, are correct.
Dumping case on regular bicycles
By the way, for the dumping case on regular bicycles EBMA and Giant China fought a long and hard battle which also involved Market Economy Treatment of the company. That battle started in August 2013 and ended in December 2017. In the end the European Court of Justice dismissed a final EBMA appeal on the cancellation of Giant China’s dumping conviction.
With that Giant China is now able to export conventional bicycles to Europe without any dumping duties. However, on that import EU’s regular 14% import duty will be levied. Next to that the question is now what will happen after the current dumping measures on regular bicycles imported from China are to expire next week; on 6 June 2018. It is said that EBMA lodged a review request.
The European Commission has up to June 5, next Tuesday, to decide whether it will respond to this request. That decision will be influenced by the fact that the latest figures from Eurostat showed a huge rise in 2017. The import from the Peoples Republic of China of conventional bicycles into the EU, on which an anti-dumping of 48.5% is levied next to an import tax of 14%, increased by a big 54% in 2017. After years of hovering between 350,000 to 400,000 units suddenly this import climbed to 635,000 units.