Member states divided over duties on Chinese ceramics

Member states divided over duties on Chinese ceramics

Commission wants duties in place for five years.

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4/3/13, 9:30 PM CET

Updated 4/13/14, 12:53 AM CET

A battle over whether Chinese producers of tableware should face punitive duties for the next five years hangs in the balance, with the European Commission struggling to persuade member states that European producers face unfair competition and need protection.

The EU’s member states have until 15 May to decide whether to give permanent status to duties that were provisionally imposed by the Commission in November. The decisive moment is, however, likely, to come today (4 April), when technical experts from the EU’s member states meet.

In November, the Commission used its right to continue with investigations and to impose provisional measures against Chinese exporters, even though the move was opposed by a majority of member states. The Commission is recommending that the duties should be imposed for five years, but on this occasion, the decision rests with the member states.

Voting will be by simple majority, with no weighting of votes according to population. When the anti-dumping advisory committee of the Council of Ministers voted on 23 October, 14 member states opposed provisional duties, nine voted in favour, and four abstained.

However, under the voting system for trade decisions, an abstention is equivalent to a vote in favour, so the effect was 14-13 against.The United Kingdom, which is both a substantial producer and importer, opposed the provisional duties and is expected to do so again.

The outcome could depend on another major producer and importer, Germany, which is thought likely to abstain, as it did in October.

That could leave the result in the hands of two islands with little production, Cyprus and Malta, which are seen as swing-voters.

Chinese imports were subject to quotas until 2004. In the nine years since, the sector has been transformed, with China’s share of the European market for porcelain and non-porcelain tableware rising from 22% to 67% in 2011, an advance that has recently been halted by radical restructuring and lowering of costs by European producers.

In the process, employment in the European  porcelain and non-porcelain industries has shrunk by about 10,000, to 25,000, according to Renaud Batier of the sector’s representative association, CeramieUnie, which brought the case to the European Commission.

Stuart Newman of the Foreign Trade Association (FTA), which represents smaller retailers and importers, argues that European producers’ loss of market share may reflect, among other influences, Europe’s economic crisis, changes in consumer behaviour and “poor business structures”.

This is not, however, the case of a European industry that is uncompetitive, Batier argues. Europe has competitive producers in every segment of the market, he says, and provisional duties have already contributed to recent decisions to build new factories in Europe.

The outcome may be affected by a decision by the Commission to suggest that duties should be lowered from 26% to 17% for Chinese producers that co-operate with the Commission. More than 400 did so during the period of provisional duties, thereby avoiding duties of 58%.

But some member states may be swayed by questions about data presented by CeramieUnie. Supporters of CeramieUnie’s complaint represented 33% of European production when the investigation began last February, substantially above the 25% threshold set by EU rules. They now account for over 50% of production.FTA contends, however, that CeramieUnie cleared the 25% threshold by omitting some production and included a company subject to a national anti-trust investigation.

Authors:
Andrew Gardner 

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