19 Oct 2018
EU Producers of E-bikes Withdraw Registration Requests in Dumping and Subsidy Case Against Mainland China
A new development has occurred in the EU anti-dumping and anti-subsidy investigations with regard to imports of e-bikes from mainland China. On 12 October 2018, it was reported that the EBMA has withdrawn its requests for the registration of e-bikes from mainland China. According to LEVA-EU, a trade association of European importers of electric bicycles, EBMA informed the European Commission of their wish to withdraw their registration requests in a letter dated 8 October 2018.
EBMA had submitted its registration requests in both the anti-dumping and the anti-subsidy investigations to the Commission on 31 January 2018.
Under EU law, imports may be made subject to registration following a request from the Union industry which contains sufficient evidence to justify such action. According to EBMA, registration was justified due to the fact that significant injury to the Union industry was being caused by an acceleration of low-priced imports, which were undermining the remedial effect of potential definitive duties by allowing stockpiling ahead of the 2018 selling season. EBMA requested that imports of e-bikes be made subject to registration so that definitive anti-dumping and countervailing measures, if imposed, could be applied retroactively to those registered imports.
The Commission followed EBMA’s argumentation and concluded that there was sufficient evidence to justify the registration of the imports of e-bikes in accordance with Article 14(5) of the basic anti-dumping Regulation and Article 24(5) of the basic anti-subsidy Regulation.
Therefore, through Implementing Regulation 2018/671, the Commission directed the Member States’ customs authorities to take the appropriate steps to register EU imports of e-bikes from mainland China as of 4 May 2018. This registration created the possibility for a retroactive application of potential definitive anti-dumping and/or countervailing duties from 4 May 2018. The Commission stated that the registration would expire nine months following the date of entry into force of the aforementioned Regulation 2018/671, i.e., on 3 January 2019. Logically, the potential retroactive collection of duties created a large amount of legal uncertainty for EU importers.
To officially end the registration and, as a consequence, the potential retroactive collection of duties, the Commission must publish a new Regulation (which is then directly applicable throughout the EU). This would come as a huge relief to many European companies.
It appears that EBMA’s letter of 8 October 2018 came shortly after the third hearing between LEVA-EU and the Commission. During that hearing, LEVA-EU presented its calculations on the injury to the EU importers resulting directly from the anti-dumping and anti-subsidy investigations. According to LEVA-EU's estimates, that injury amounts to more than € 90 million. It is unclear whether there is a link between LEVA-EU's statements on injury at the hearing and EBMA's decision to withdraw the request for registration.
In addition, Hong Kong traders should be aware of the fact that two EU importers have filed a motion with the EU General Court to strike down the Commission’s decision on registration, thereby seeking annulment of the aforementioned Regulation 2018/671. According to these importers, all evidence collected by the Commission so far shows that the EU industry has not been injured and, quite to the contrary, has even managed to increase its sales and production.
It may be recalled that, on 20 October 2017, the Commission had initiated an anti-dumping investigation with regard to imports of “cycles, with pedal assistance, with an auxiliary electric motor” originating in mainland China and falling under CN codes 8711 60 10 and 8711 60 90. The Commission launched the investigation following a complaint of dumping lodged on 8 September 2017 by EBMA. This investigation is said to be one of the EU’s biggest trade defence cases, worth up to 400 million euros.
Then two months later, on 21 December 2017, the Commission initiated a separate anti-subsidy investigation with regard to those same imports. According to the European industry, companies from mainland China are benefiting from state aid, including but not limited to forms of cheap loans and grants, subsidies linked to high technological development, and free patent protection, which is felt to be a big cost for European producers.
With regard to the anti-dumping investigation, through Implementing Regulation 2018/1012, the Commission imposed provisional anti-dumping duties ranging from 21.8 to 83.6 percent as of 19 July 2018. According to Trade Commissioner Cecilia Malmström, definitive anti-dumping duties will be imposed, at the latest, on 18 January 2019.
With regard to the anti-subsidy investigation, the deadline for imposing provisional countervailing duties has already expired. The deadline for imposing definitive countervailing duties is 19 January 2019. Taking into account that this is a Saturday, the Commission will likely impose the definitive countervailing duties on 18 January 2019, together with the imposition of the definitive anti-dumping duties.