March 9 (Bloomberg) -- The European Union may ease 19-year-old trade protection on bicycles from China because of changes in the Chinese and EU markets.
The EU said it would review a 48.5 percent import duty because Chinese bikemakers may be eligible for more favorable treatment following China’s removal last year of an export-quota system. In addition, EU bicycle output in lower-cost eastern countries has grown, according to the bloc.
The levy is meant to punish Chinese exporters for selling bikes in Europe below cost, a practice known as dumping. In October, the EU renewed the anti-dumping duty for five years to help European producers including Accell Group NV compete with cheaper imports.
The review “will determine whether there is a need for the continuation, removal or amendment of the existing measures,” the European Commission, the 27-nation EU’s trade authority in Brussels, said today in the Official Journal. “The continued imposition of measures at the existing level may no longer be appropriate.” The probe will last as long as 15 months.
European trade protection against Chinese bicycles dates to 1993, when the EU introduced a 30.6 percent anti-dumping duty on imports from China. The bloc renewed that levy in 2000 before raising it to the current 48.5 percent in 2005 at the same time as introducing anti-dumping duties as high as 34.5 percent on imports from Vietnam.
The EU let the levies against Vietnam expire in July 2010 while opening an investigation into whether to renew the 48.5 duty against China, a step that automatically kept the measure in place at least for the duration of the probe. The five-year extension in October was the outcome of that inquiry.
In its reasons for opening the review today, the commission also said “several” European bikemakers had switched to partial assembly operations involving imported parts. In addition, the commission said most bikes are now made of aluminum alloys rather than steel, which was the basis for determining injury to EU producers caused by imports from China.
China’s share of the EU bicycle market fell to 3.1 percent in the 12 months through March 2010 from 4.4 percent in 2007, the bloc said in October. China annually produces 80 million bikes, of which 55 million are for export, according to the EU.
Separately today, the EU threatened to renew anti-dumping duties on a welding product from China for another five years. The commission opened a review into whether to let lapse the levies of as much as 63.5 percent on tungsten electrodes, used for welding in industries such as aerospace, automobiles, shipbuilding and oil and natural gas.
The EU imposed the duties against China in March 2007 to shield Austria’s Plansee Metall GmbH from cheaper imports. The trade protection, which was due to lapse next week, will now stay in place during the probe, which can last as long as 15 months.
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