Chinese Fastener Exporters Warn Against Imminent EU Anti-dumping Duties
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Nov 25,2008
Chinese exporters warned Monday that a possible decision made by the European Union (EU) to imposeanti-dumping duties on Chinese-made fasteners will hurt both sides and may fuel tensions between the two trading powers.
BOTH SIDES LOSE
"The duties will not only deny Chinese exporters the access to the EU market, but also increase costs for European industries which rely on those products and in the end make European consumers pay," said Zhang Feng, deputy secretary-general of the Jiaxing Association of Fastener Import and Export Companies, a Chinese exporters lobby which leads a legal fight on the case.
Following one year's investigation, the European Commission proposed early this month to impose anti-dumping duties of between63 and 87 percent on Chinese fasteners over the next five years and the EU member states are due to make a formal decision on this Wednesday.
The measure will cover up to 200 fasteners imported from China such as screws and bolts widely used for cars, large household appliances and machinery in the EU.
The value of the imports reached 575 million euros (736 million U.S. dollars) last year, which makes it one of the biggest EU anti-dumping cases against China.
For Chinese exporters, stakes are high since the duties may mean they will be squeezed out of the European market, which accounts for one third of their total exports, resulting in a loss of thousands of jobs.
It is estimated that there are around 10,000 fastener producers and trading companies in China which employ 2.5 million workers.
"If there will be this high anti-dumping duty, around 800,000 workers will lose their jobs," Zhang said.
Although European fastener producers will make more profit thanks to rising prices on the EU market, it will be European users and consumers who pay for it, Zhang said.
If the duties of between 63 and 87 percent are imposed, European users and consumers will have to pay an extra 402 million euros (515 million U.S. dollars) on average annually, according to Zhang.
"Amid the financial crisis, this will increase dramatically the cost of downstream users and put the whole European industry in a worse position," Zhang said.
LEGALLY FlAWED, ECONOMICALLY WRONG
Robert MacLean, a trading partner at the law firm Crowell Moring in Brussels who represents Chinese exporters, said the expected decision to impose the anti-dumping duties will be both legally flawed and economically wrong.
"I think what is missing is injury. European industry has not shown any injury," he said. "We think this decision is more politically motivated than technically motivated."
Chinese exporters had argued that as their products sold to Europe are standard fasteners mainly for general industrial use and DIY markets and are different from European ones which are of high strength and are mainly for car industry, earth-moving industry and airplanes, there should be no serious damage to the European industry, a key requirement to impose the anti-dumping duties.
"Chinese fasteners and European fasteners are complementary with each other. They do not compete directly in the market," the association said in a statement.
They were particularly angered at the EU decision that two Chinese units of two European companies, namely Italy's Agrati and Spain's Celo which were behind the complaint, will be exempted from the duties.
"EU granted special treatment to EU invested companies in China, which is totally unfair to Chinese producers," Zhang said.
In the context of the financial crisis and a looming recession in Europe, MacLean said he could not see the reason behind the duties.
"We are wondering why they are doing it because the European industry needs raw materials to produce cost-effective goods for consumers," he said. "We do not understand why some industries are asking for financial help, the Commission is penalizing them by having extra costs on to their production."
The European car industry, a heavy user of fasteners, is demanding funding support from the EU and some member states.
"If you have financial crisis, the last thing you want to do is to increase production cost for your industries," MacLean said.
WTO SUIT ENCOURAGED
Believing the EU's imminent decision is fundamentally flawed, Zhang said his association had requested the Chinese government to appeal to the World Trade Organization (WTO) on the EU's abuse of anti-dumping norms.
In a counter-attack, the Chinese companies are also gathering information to request the Chinese authority to launch an anti-dumping investigation against the subsidiaries of Agrati and Celo for their unfair commercial behavior by taking advantage of the EU's anti-dumping proceedings to eliminate competitors in the market.
"We just got news that Beijing is preparing for appealing to the WTO on this case and starts to investigate Agrati and Celo seeking their own interests by taking advantage of its status of European company subsidiaries," Zhang said.
A trade official in the Chinese mission to the EU declined to confirm the report as the EU has not made a formal decision.
MacLean said the case would be important because it represents a series of similar cases against Chinese products.
Only a week ago, the EU imposed interim duties on Chinese-made candles and non-alloy steel products. So far, a number of Chinese steel products, including certain hot-dipped metallic-coated iron or steel flat-rolled products and stainless steel cold rolled flat products, have been under EU investigation for dumping claims.
MacLean said the Chinese government should take a tough line in the fastener case in order to prevent a domino effect, adding there is a good chance for China to win if Beijing decides to go to the WTO.
Analysts say the fastener case is a test for the newly-appointed EU Trade Commissioner Catherine Ashton, who warned recently nations should refrain from protectionist measures in the face of the financial crisis which is dampening world economic growth.
It is predicted that EU member states will again run into division on the issue when they vote Wednesday, MacLean said.
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