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“The Chinese Government is sub- sidizing its bike producers.” If you made such a statement to passers-by in Beijing, you might be considered insane. Bicycle producers are neither hi-tech enterprises nor a pillar of the local economy.
No government at any level would throw money at an industry ordinary people care very little about. Furthermore, bike production does not need a large investment or special fiscal support. Bike production has been a market-oriented industry in China, so it is strange to suggest the industry is subsidized.
The European Union (EU), however, holds such a view. Its trade protectionism measures against Chinese bikes—for reasons of dumping and government subsidies—have lasted 20 years.
In 2011, Chinese bikes exported to the EU accounted for a mere 3 percent of total bike sales in that market, with no dumping or other damage brought to the European bike-producing industry. The United States and Japan have both opened their markets to Chinese bikes, leaving the EU as the only developed economy behaving as an outlier.
“China used to be a big bike producer. Twenty years ago the EU protected its enterprises by blocking Chinese bikes from entering its market,” said Liu Pengxu, Deputy Director of the Legal Service Department of China Chamber of Commerce for Import and Export of Machinery and Electronic Products(CCCME).
“The EU’s anti-dumping measure has continued 20 years on. Any industry after such lengthy protection can solve its problems and grow into a healthy and strong industry. Therefore, the EU shouldn’t carry out such measures against WTO rules,” Liu said.
The Longest punitive tariff
The EU has imposed anti-dumping tariffs against Chinese bikes even after several sunset reviews. During the latest sunset review carried out in October 2011, the EU decided to extend the then-19-yearold tariff by five years to 2016, with the anti-dumping tariff rate standing at 48.5 percent.
The European Commission announced in April that it will begin an anti-subsidy investigation against Chinese bikes. On September 25, it said that it would launch an anti-circumvention investigation into imports of bicycles originating in China and shipped through Indonesia, Malaysia, Sri Lanka and Tunisia.
The EU argues that evidence proves the anti-dumping measures on imports of bicycles originating in China are being circumvented by means of shipment via the above-mentioned countries. According to EU figures, in 2009-10, EU’s imports of bicycles from Sri Lanka doubled, accounting for 5 percent of the market share.
The EU suspects Chinese bike makers are evading anti-dumping tariffs. Authorities will decide within nine months whether to raise anti-dumping tariffs. Once any decision is made, the involved products in the above regions will be subject to anti-dumping tariffs.
The EU has already adopted a number of trade remedy measures, including antidumping, anti-subsidy and anti-circumvention measures, with only safeguard measures left unused. Safeguard measures are defined as an“emergency” action in which a particular import threatens to cause serious damage to the local industry.
After nearly 20 years of anti-dumping measures, it would be difficult for bicycles imported from China to Europe to proliferate in a short time.
Tu Xinquan, Deputy Director of the China Institute for WTO Studies at the University of International Business and Economics, said the reason the EU has imposed anti-dumping tariffs against Chinese bikes is due to the strong competitiveness of the Chinese products. The EU is concerned about the impact on its industry should anti-dumping tariffs be suspended, and therefore has turned to protectionism to shield itself.
According to Tu, two decades of antidumping tariffs against Chinese bikes is related to the expansion of the EU itself. Tu said that as long as the EU continues to expand, it can maintain the tariffs under the excuse that it must conduct interim reviews every time it extends membership or considers extending membership to another country.
He added that the EU’s limit on bike imports from China is actually unfair to EU consumers because it deprives them of the right to buy bicycles at favorable prices.
Bike makers spinning wheels
There are currently 1,800 bike producers in China, of which 80 percent are foreign owned, joint ventures or privately owned, and the other 20 percent are state-owned enterprises. In 2011 China’s exports accounted for 60 percent of the world’s total trade volume of bicycles.
Fifty percent of Chinese bikes are sold to the United States and Japan, and its exports to the 27 EU-member countries account for only 3.1 percent.
The rapid growth of China’s bike exports began in the late 1980s. Since 1992, the EU, Argentina, Mexico, Canada, the United States, Japan, South Korea and Turkey have all initiated anti-dumping and safeguard measures against Chinese bikes. Among these countries, the EU has ardently sustained its limitation.
When satisfying the demand of consumers, bikes originating in China are also sanctioned by various countries. A report released by the CCCME suggested there are two major reasons for these sanctions.
First, some countries have not yet accepted China’s status as a market economy and are calculating the prices and costs of Chinese products by choosing a third country as a surrogate, putting China in a passive po- sition. Second, many Chinese enterprises give up responding to trade proceedings because of high costs and complicated procedures, thereby creating an image to the world of having a guilty conscience.
Some Chinese enterprises do indeed act inappropriately. In previous anti-dumping cases, some enterprises were found to write receipts at markedly low prices at the request of importers in order to maintain business ties.
“Are all trade barriers caused by discrimination and irrational behavior against us? Of course not. To exploit the market, Chinese enterprises should first understand the market rules and customers’ habits. If Chinese companies are less focused on low prices but pay more attention to offering products and services of high quality, and if we can act in accordance with international trade rules, it would be hard for foreign countries to restrict us so easily,” said the CCCME report.
The importers are also highly responsible. “Every time we encounter antidumping charges, our immediate response is that we encounter trade barriers from the consumption nation. In fact, when importers introduce our products in massive numbers at low prices, they can also be a source for why trade barriers are erected,” the report said.
No government at any level would throw money at an industry ordinary people care very little about. Furthermore, bike production does not need a large investment or special fiscal support. Bike production has been a market-oriented industry in China, so it is strange to suggest the industry is subsidized.
The European Union (EU), however, holds such a view. Its trade protectionism measures against Chinese bikes—for reasons of dumping and government subsidies—have lasted 20 years.
In 2011, Chinese bikes exported to the EU accounted for a mere 3 percent of total bike sales in that market, with no dumping or other damage brought to the European bike-producing industry. The United States and Japan have both opened their markets to Chinese bikes, leaving the EU as the only developed economy behaving as an outlier.
“China used to be a big bike producer. Twenty years ago the EU protected its enterprises by blocking Chinese bikes from entering its market,” said Liu Pengxu, Deputy Director of the Legal Service Department of China Chamber of Commerce for Import and Export of Machinery and Electronic Products(CCCME).
“The EU’s anti-dumping measure has continued 20 years on. Any industry after such lengthy protection can solve its problems and grow into a healthy and strong industry. Therefore, the EU shouldn’t carry out such measures against WTO rules,” Liu said.
The Longest punitive tariff
The EU has imposed anti-dumping tariffs against Chinese bikes even after several sunset reviews. During the latest sunset review carried out in October 2011, the EU decided to extend the then-19-yearold tariff by five years to 2016, with the anti-dumping tariff rate standing at 48.5 percent.
The European Commission announced in April that it will begin an anti-subsidy investigation against Chinese bikes. On September 25, it said that it would launch an anti-circumvention investigation into imports of bicycles originating in China and shipped through Indonesia, Malaysia, Sri Lanka and Tunisia.
The EU argues that evidence proves the anti-dumping measures on imports of bicycles originating in China are being circumvented by means of shipment via the above-mentioned countries. According to EU figures, in 2009-10, EU’s imports of bicycles from Sri Lanka doubled, accounting for 5 percent of the market share.
The EU suspects Chinese bike makers are evading anti-dumping tariffs. Authorities will decide within nine months whether to raise anti-dumping tariffs. Once any decision is made, the involved products in the above regions will be subject to anti-dumping tariffs.
The EU has already adopted a number of trade remedy measures, including antidumping, anti-subsidy and anti-circumvention measures, with only safeguard measures left unused. Safeguard measures are defined as an“emergency” action in which a particular import threatens to cause serious damage to the local industry.
After nearly 20 years of anti-dumping measures, it would be difficult for bicycles imported from China to Europe to proliferate in a short time.
Tu Xinquan, Deputy Director of the China Institute for WTO Studies at the University of International Business and Economics, said the reason the EU has imposed anti-dumping tariffs against Chinese bikes is due to the strong competitiveness of the Chinese products. The EU is concerned about the impact on its industry should anti-dumping tariffs be suspended, and therefore has turned to protectionism to shield itself.
According to Tu, two decades of antidumping tariffs against Chinese bikes is related to the expansion of the EU itself. Tu said that as long as the EU continues to expand, it can maintain the tariffs under the excuse that it must conduct interim reviews every time it extends membership or considers extending membership to another country.
He added that the EU’s limit on bike imports from China is actually unfair to EU consumers because it deprives them of the right to buy bicycles at favorable prices.
Bike makers spinning wheels
There are currently 1,800 bike producers in China, of which 80 percent are foreign owned, joint ventures or privately owned, and the other 20 percent are state-owned enterprises. In 2011 China’s exports accounted for 60 percent of the world’s total trade volume of bicycles.
Fifty percent of Chinese bikes are sold to the United States and Japan, and its exports to the 27 EU-member countries account for only 3.1 percent.
The rapid growth of China’s bike exports began in the late 1980s. Since 1992, the EU, Argentina, Mexico, Canada, the United States, Japan, South Korea and Turkey have all initiated anti-dumping and safeguard measures against Chinese bikes. Among these countries, the EU has ardently sustained its limitation.
When satisfying the demand of consumers, bikes originating in China are also sanctioned by various countries. A report released by the CCCME suggested there are two major reasons for these sanctions.
First, some countries have not yet accepted China’s status as a market economy and are calculating the prices and costs of Chinese products by choosing a third country as a surrogate, putting China in a passive po- sition. Second, many Chinese enterprises give up responding to trade proceedings because of high costs and complicated procedures, thereby creating an image to the world of having a guilty conscience.
Some Chinese enterprises do indeed act inappropriately. In previous anti-dumping cases, some enterprises were found to write receipts at markedly low prices at the request of importers in order to maintain business ties.
“Are all trade barriers caused by discrimination and irrational behavior against us? Of course not. To exploit the market, Chinese enterprises should first understand the market rules and customers’ habits. If Chinese companies are less focused on low prices but pay more attention to offering products and services of high quality, and if we can act in accordance with international trade rules, it would be hard for foreign countries to restrict us so easily,” said the CCCME report.
The importers are also highly responsible. “Every time we encounter antidumping charges, our immediate response is that we encounter trade barriers from the consumption nation. In fact, when importers introduce our products in massive numbers at low prices, they can also be a source for why trade barriers are erected,” the report said.