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Highest EU Court Confirms Annulment of Anti-dumping Duties on Giant’s Bicycles from Mainland China; Ramifications Ensue for Other Companies As Well

On 14 December 2017, the EU Court of Justice (ECJ) delivered its judgment dismissing an appeal brought by the European Bicycle Manufacturers Association (EBMA), thereby confirming that the anti-dumping duties imposed on bicycles manufactured by Giant were correctly annulled by the EU’s (lower) General Court. This judgment puts an end to a long-lasting court battle initiated by Giant in August 2013. It also means that the anti-dumping duties that have been in place for more than 20 years are finally at an end, at least insofar as Giant is concerned.

Hong Kong traders may recall that the EU anti-dumping duties on Chinese bicycles were initially imposed back in 1993. Since then, the duties have been renewed and extended on several occasions to also cover bicycle parts and imports from other countries, including Indonesia, Malaysia, Sri Lanka and Tunisia, and more recently Cambodia, Pakistan and the Philippines.

The measures challenged by Giant before the EU’s General Court were adopted following an interim review that took place in 2012-2013. The measures took the form of individual anti-dumping duties for a few producers and a so-called residual duty of 48.5% applicable to all other Chinese mainland companies, including Giant.

In the course of that interim review, the EU institutions decided to disregard information submitted by Giant and instead to apply Article 18(1) of the Basic Anti-Dumping Regulation allowing for the use of “facts available” for the purposes of calculating the company’s export price. Pursuant to Article 18(1), the EU institutions may reach their findings on the basis of “facts available” when an interested party refuses access to, or otherwise does not provide, “necessary information” within the relevant time limits, when it significantly impedes the investigation or when it supplies false or misleading information. The Commission’s decision to rely on Article 18(1) was motivated by the fact that Giant failed to provide information concerning another company, Jinshan, to which it was allegedly related.

Regulation 502/2013 imposing the disputed anti-dumping measures was challenged by Giant before the EU's General Court shortly after its adoption.

On 26 November 2015, the EU’s General Court ruled that the Council erred in applying Article 18(1) of the Basic Anti-Dumping Regulation and in relying on “facts available” for the purposes of calculating the export price for Giant, because it had the information necessary for calculating a reliable export price and thus for establishing an individual dumping margin and an individual anti-dumping duty for Giant. While the Court did not explicitly rule on the relationship between Giant and Jinshan, it did find that the information pertaining to Jinshan was not necessary to calculate an individual dumping margin for Giant.

The General Court also found that, in the circumstances of that case, the Council could not rely on the alleged risk of circumvention to justify its refusal to apply an individual anti-dumping duty to Giant. The General Court held that a hypothetical risk of circumvention cannot in itself justify the refusal to calculate an individual dumping margin. It also found that in the specific circumstances of that case, the information available to the EU institutions was sufficient to conclude that there was no risk of circumvention between the Giant and Jinshan groups of companies.

As a consequence, the General Court decided to annul Regulation 502/2013 insofar as it concerned Giant. In February 2016, that judgment was appealed by EBMA who acted as an intervener in the proceedings before the General Court. EBMA submitted three grounds of appeal, arguing that the General Court erred in the interpretation and application of Article 18 of the Basic EU Anti-Dumping Regulation and in that it considered that there would be no risk of circumvention if Giant were given an individual anti-dumping duty.

Following an exchange of written submissions and a hearing in March 2017, the ECJ decided to reject all three grounds of appeal put forward by EBMA and, on that basis, dismissed the appeal in its entirety.

The ECJ’s judgment follows the Opinion of the Advocate General issued in July 2017. It is especially significant for Chinese mainland companies that are or may be involved in the EU’s anti-dumping proceedings targeting their products. This is because it provides clarification on what may be considered as “necessary information” in the context of anti-dumping investigations. According to the ECJ, the term “necessary information” refers to information “held by the interested parties which the EU institutions asked them to provide in order to enable them to reach the appropriate findings in an anti-dumping investigation”. The ECJ also stressed that the assessment as to whether an item of information is “necessary” must always be carried out on a case-by-case basis.

Traders should note that these findings will likely have an important impact on future anti-dumping investigations as they leave no doubt that the EU institutions need to justify why the information they request from companies in the course of anti-dumping proceedings is necessary. Furthermore, it is only when a company fails to provide such “necessary” information – and not just any information requested by the EU institutions – that the Commission is allowed to resort to “facts available” under Article 18 of the Basic Anti-Dumping Regulation.

With regard to the risk of circumvention, the ECJ rejected EBMA’s position that in the case of related companies, there is always a risk of circumvention. The ECJ stressed that the EU institutions are required to demonstrate that, in the light of the particular circumstances of the investigation concerned, there is a genuine risk of circumvention. This finding is relevant for traders as it confirms that the EU institutions cannot rely on a hypothetical risk of circumvention as the basis for refusing to calculate a company’s individual dumping margin.

The ECJ’s judgment renders the annulment of Regulation 502/2013, insofar as it concerns Giant, definitive. In that regard, it is important to recall that the annulled Regulation is considered to be void from the time it entered into force. This means that the EU customs authorities can no longer collect the anti-dumping duties imposed on imports of bicycles from Giant and that duties paid in the past on the basis of the annulled Regulation need to be repaid.

Hong Kong traders should note that the anti-dumping duties imposed by Regulation 502/2013 on other Chinese mainland producers of bicycles are due to expire on 6 June 2018. Should the Commission decide to open an expiry review, the duties may be extended for another 5 years.

Content provided by Picture: HKTDC Research
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