Europe Initiates China Dumping Investigation Amid Growing Chinese Concern

Jason Sandefur

The European Commission will investigate the alleged dumping of carbon steel fasteners from China. The investigation is the result of a complaint lodged in September by the European Industrial Fastener Institute on behalf of manufacturers in 20 European states. \
Fasteners in ten CN tariff codes will be investigated, including woodscrews, self-tapping screw, hexagon and socket head bolts, other cold formed threaded fasteners, and washers.
“The most significant issue looks to be the choice of comparison country for establishing a normal value for the fasteners in question,” Fastener & Fixing Europe editor Phil Matten reports.
Since the EU does not recognize China as a market economy, the Commission is proposing to compare with prices in the Indian market instead of the normal comparison with domestic prices in the country of origin.
If Chinese fastener companies are unable to demonstrate market economy status to EC investigators, eventual tariffs are likely to be very high.
The issue of market economy status prompted serious concern among Chinese fastener manufacturers, who argue that if export prices are compared with the fiercely competitive Chinese domestic market, there is no dumping and in some cases export prices are 5% higher.
But EC investigators are likely to focus on whether the cost of wire rod used in production is subsidized.
“Despite substantial price increases during 2007 Chinese wire rod prices remain as much as 35% to 40% lower than their European equivalent,” Matten reports. This makes it “very difficult to see how Chinese authorities can argue that its steelmakers are operating on a market economy model.”
However, the application of punitive antidumping tariffs runs the risk of serious market disruption and the reversal of recent reductions in Chinese export subsidies, Matten points out. �2007 FastenerNews.com