EU may extend duties on China bicycle imports

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The European Union is set to review import duties on Chinese-made bicycles and bicycle parts and could extend punitive tariffs until 2016, EU diplomats say, a move likely to aggravate EU-China trade relations.

China exported nearly 700,000 bicycles and had total bicycle-related exports to the EU worth 430 million euros (US$526 million) last year, despite the EU imposing an anti-dumping duty of 48.5 percent on the goods.

The duties, first imposed in 1993, have frustrated Chinese attempts to gain greater market share in Europe, where sales of bicycles and parts total around 5 billion euros a year.

The duties have gradually been increased since first being levied 17 years ago but the latest 48.5-percent regime, imposed in 2005, is due to expire in mid-July.

The European Bicycle Manufacturers Association (EBMA), which represents an industry employing around 20,000 people, mostly in Germany and Italy, has asked the EU's executive Commission to extend the duties for a further five years.

The Commission has until July 15 to reach a decision on whether to launch a review of the regime, which could then lead to a five-year extension of the tariffs, diplomats say. The review itself could last up to 15 months.

"There's a lot of pressure from EU industry to keep the duties in place," Richard Luff, a partner at Brussels-based law firm Van Bael & Bellis, said on Friday.

In its complaint, registered with the Commission this spring, EBMA said allowing duties against Chinese imports to expire would result in more dumping of bicyles and bicyle parts by Chinese exporters, damaging Europe's industry.

Europe produced more than 13 million bikes and 1.6 billion euros worth of bike parts in 2008, according to industry group Colibi. The average price of bicycles ranges from 680 euros in the Netherlands to 100 euros in Europe's eastern states.

European Commission officials said they could not comment on the possibility of a review of the anti-dumping duties.

Break for Vietnam

While duties on China look set to be extended, similar tariffs levied on Vietnamese-made bicycles are expected to be allowed to expire, a nod to slumping bike exports since the duties were imposed and improved trade relations with Vietnam. The EU and Vietnam are due to start talks on a free-trade agreement later this year.

Yet Vietnam's exclusion from renewed duties may not immediately reinvigorate the country's bike export industry.

"You won't see a huge number of bicycles coming out of Vietnam anymore, or anyone making big investments. It's too late for that," said Jon Edwards, chief executive of Taiwan-owned High Ride Bicycle, which moved its production from Vietnam to Cambodia in the wake of the EU duties, levied in 2005.

"It shows a bit of the fallacy of dumping duties," he said. "They don't really offer any protection to the EU. They only made us move our production to a country that had never exported a single bike to the EU."

An extension of the duties on China is likely to aggravate EU relations with Beijing, already damaged by complaints over imports of Chinese ceramic tiles, paper and wireless modems.

It may also lead to tension between EU countries with high bicycle production, such as Italy and Germany, and those countries that produce few bicycles and would like to import cheaper options from China, such as Britain.

"The principle here is that free trade is good for the customer," said Alisdair Gray, director of the British Retail Consortium in Brussels.

"How are we meant to get kids away from their TV screens and onto their bikes when we're making it unaffordable for so many of them to even consider it?"

The European Bicycles Manufacturers Association declined to comment on its complaint.

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