Bloomberg News

Chinese Bicycle Makers Face Threat of EU Anti-Subsidy Tariffs

April 27, 2012

The European Union threatened to impose tariffs on bicycles from China to counter alleged subsidies to Chinese exporters, bolstering a new front in the EU’s battle to protect its producers.

The EU opened a probe into whether Chinese bikemakers receive trade-distorting government aid, a step that may lead the bloc to impose anti-subsidy duties against China. To date, the EU has hit China with anti-subsidy levies only once.

The investigation will determine if bicycles from China are “being subsidized and whether this subsidization has caused injury to the union industry,” the European Commission, the 27- nation EU’s trade authority in Brussels, said today in the Official Journal. The commission has nine months to decide whether to impose provisional anti-subsidy duties and EU governments have 13 months to decide whether to apply “definitive” levies for five years.

Europe is stepping up scrutiny of alleged state aid to Chinese manufacturers, raising the prospect of more European import duties to protect higher-cost producers. Most of the EU’s punitive tariffs against China punish exporters there for selling goods in Europe below cost, a practice known as dumping. China faces more EU anti-dumping duties than any other country.

In May 2011, the EU imposed anti-subsidy tariffs against China for the first time by targeting imports of paper with levies as high as 12 percent. The five-year duties (EUGNEMUQ:US) aimed to counter subsidies to China’s exporters of coated fine paper, which is used for books, brochures and magazines.

Coated Steel

In February this year, the EU said it may impose anti- subsidy duties on Chinese organic coated steel by opening a probe that is continuing. This kind of steel is used in domestic appliances, construction, heating and furniture, among other things, according to ArcelorMittal, the world’s largest steelmaker.

The inquiry into alleged Chinese state aid to makers of bicycles stems from a March 15 complaint by the European Bicycle Manufacturers Association on behalf of producers that account for more than 25 percent of the EU’s output of bikes, according to the commission, which didn’t identify any companies.

The EU already imposes an anti-dumping duty on Chinese bicycles -- trade protection that is 19 years old. Last month, the bloc said it may ease the 48.5 percent duty because of changes in the Chinese and EU markets.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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