BRUSSELS, Belgium (BRAIN) — The early months of this year could bring resolutions on one or more duty- and subsidy-related investigations currently under consideration by the European Commission relative to trade between Asia and the European Union.
The investigation must close by the end of May on a complaint from the European Bicycle Manufacturers Association (EBMA) that the government of the People’s Republic of China is granting exemptions from income and other direct taxes and tariff exemptions to Chinese manufacturers. This violates a protection enacted in 2009 by the European Council against subsidized imports from countries outside the European community. Acting on behalf of at least 25 percent of the EU’s bicycle producers, EBMA claims the Chinese government subsidies include preferential tax policies, loans and interest rates, income tax credits for domestically owned companies purchasing domestically produced equipment and a corporate income tax refund program to reinvest profits of a foreign-invested enterprise in export-oriented businesses.
Another investigation, launched in late September, focuses on a claim by the EBMA that China bicycle producers are shipping bikes to Europe through Indonesia, Malaysia, Sri Lanka and Tunisia to avoid the 48.5 percent tax levied on complete bicycles and bicycle parts imported from China.
The association filed the claim in August on behalf of EU manufacturers In Cycles, Eurosport DHS and Maxcom Ltd., pointing to a significant change in the pattern of trade involving exports from those countries to the EU—a threat to EU producers that should be protected by the anti-dumping duties from China. The investigation into that claim is to be concluded by the end of June.
In the meantime, the Commission is still hearing from Chinese manufacturers on the validity of the original anti-dumping duties of 48.5 percent, which have been in place for nearly 20 years. Chinese bicycle makers are lobbying intently against those duties, and released a statement prior to an October hearing in Brussels on the issue, arguing the merit of the protection for EU producers.
Eric Jiang, an attorney representing the Chinese manufacturers, told the China Daily newspaper that the injury claim by the EU bicycle industry is unfounded, as the industry showed higher profitability and larger market share despite increased competition and economic crisis.
“The European manufacturers managed to sell at a price of 20 percent higher in 2009, as compared to what they did five years ago,” Jiang said. The duties have shielded EU producers from global competition and led to higher prices for European consumers, opponents say.
After a yearlong expiry review, the European Commission extended the anti- dumping duties last October. They are currently in place until July 2016.