Taiwan’s Growing E-Bike Export to EU Triggers Questions on Local Content Rules
TAIPEI, Taiwan – Last week’s Taipei Cycle made abundantly clear that there’s a turnaround taking place in Taiwan. The island’s industry is turning to e-bikes and their export to the EU. It’s prompted by the anti-dumping duties now in place for e-bikes exported from China to Europe. It blocks many of the Chinese e-bike exporters and with that offers opportunities for Taiwan makers. But it also raises questions on the rules set by the EU on origin and local content.
Bike Europe received questions from several sources on the European Union rules of origin and the related local content. These questions reflect the anxiety of Taiwan based assemblers for violating European regulations, which can lead to heavy fines. Also importers in Europe could be harmed by the illegal export of e-bikes from Taiwan to Europe. Such importers could be retroactively forced to pay the dumping duties when Customs officials in one of the EU member states judges that regulations are infringed. So here’s an overview of the relevant EU regulations; not only for in Taiwan assembled e-bikes that are exported to Europe, but also for the ones made in Cambodia, Vietnam and Bangladesh.
Transshipments via Taiwan
When e-bikes are assembled in Taiwan with Made in China drive systems (motor, battery and all electronics shipped from China to Taiwan) that are to be exported to Europe; how does this relate to EU origin rules?
Rules of origin and related local content explained
This will come down to violating rules of origin. Exporting e-bikes to Europe on this basis with motor, battery and electronics originating in China means that it is basically a Chinese e-bike as the assembly activities in Taiwan are too limited. The Certificate of Origin must classify it as a China made e-bike.
What if e-bikes are exported from Taiwan to Europe through transshipments meaning that Taiwan is used as ‘middle’ country. The e-bikes will be re-exported to one of the EU member states by using Taiwan Certificate of Origin documents. Is this permitted by EU Customs?
What this ‘re-export’ or ‘transshipment’ boils down to is circumvention of the anti-dumping rules and duties as brought info force in January 2019 by the European Union.
Using a 3rd (also named ‘middle’) country for the re-export of e-bikes to Europe is regarded as being the biggest threat to the anti-dumping measures. This practice means that the country of origin of the exported product is changed illegally because the majority of the value of the product is made of components originating in China and the final assembly also took place in China.
Furthermore, these regulations are related to the local content rules. These rules specify for Taiwan that 70 percent of the ex-works price of the (electric) bikes exported to Europe must be made with in Taiwan manufactured components like frames, mid-motors and/or batteries.
What are the rules of origin/local content for in Cambodia, Vietnam, or Bangladesh assembled e-bikes that are exported to Europe?
For Cambodia other local content rules apply compared to the ones for Taiwan. That’s because this country holds a special trading relationship with Europe as the European Union regards Cambodia as an underdeveloped country. This is embedded in the Generalized System of Preferences – GSP. Cambodia holds the so-called GSP+ status which rules that 30 percent (instead of 70 percent because of their GSP+ status) of the ex-works price of the electric bikes exported to Europe must be made with in Cambodia manufactured components like frames.
Local content rule Vietnam
For Vietnam the local content rule stands at 50 percent because this country is also in the Generalized System of Preferences (GSP) bringing export benefits granted by the EU as it regards countries like Cambodia, Vietnam and Bangladesh as under-developed countries.
As the local content set for GSP countries like Cambodia, Vietnam and Bangladesh, which export to the European Union is substantial, it has to be noted that there are ‘specially removed’ bi-lateral cumulation rules which apply here. They state that parts (like mid-motors) imported from Europe that are to be fitted on Vietnam made e-bikes, are considered local content. It boils down to the fact that EU made parts add value to the local content making it much easier to reach the named local content and with that the rules of origin of the made in Cambodia, Vietnam and Bangladesh e-bike that is exported to Europe.
Whitepaper on anti-dumping measures
Bike Europe has gathered all the information related to the, on 18 January 2019 by the European Commission, announced anti-dumping measures on e-bikes imported from China.