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Cover Stories Series 2012> A Roadmap for Change> Archive
UPDATED: October 29, 2012 NO. 44 NOVEMBER 1, 2012
When Will Protectionism End?
Excessive protection of the bicycle industry weakens EU's competitiveness
By Lan Xinzhen

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 anti-dumping, 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 anti-dumping 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 position. 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 anti-dumping 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.

China's Bike Exports in 2011

China exported 55.72 million bicycles, valued at $2.9 billion. Of the total, 945,000 bikes were exported to the EU, accounting for 1.7 percent of China's exports.

The five biggest buyers of Chinese bicycles were the United States, Japan, Russia, South Korea and Iran.

(Source: China Bicycle Association)

Email us at: lanxinzhen@bjreview.com

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