Peddle power

Bumping into EU regulations?

Plenty of Chinese cities have banned electric bicycles. Unlicenced and often driven on pavements instead of roads, the silent speedsters have been described as a dangerous scourge.

And now the European Union is also saying that China’s e-bikes are a threat, albeit more a commercial one

In October the European Bicycle Manufacturers Association (EBMA) filed a complaint alleging that Chinese e-bike makers were dumping their goods in the EU market.

The EBMA argues that Chinese e-bike producers have been able to obtain heavy state subsidies which have enabled them “to catch up quickly with the EU industry in terms of know-how”.

The complaint highlights Bafang, China’s leading maker of e-bike engine systems, as the “most important” aggressor in the case. The EBMA argues that once the Suzhou-based company managed to build a “reliable centre engine”, other Chinese producers were able to get a free ride into new and growing market segments such as e-mountain bikes.

Of course, parity in “know-how” isn’t grounds for a dumping investigation. Rather, the EBMA alleges that subsidies from the Chinese government have supported a flood of lower-priced goods, and that imports of Chinese e-bikes have risen from “virtually zero” in 2010 to an estimated 800,000 this year, with the imports selling at about a third of the price of similar products made in the EU.

In response, the EBMA says tariffs on the Chinese e-bikes should be levied at somewhere between 193% and 430%.

Naturally, the claim is being condemned in China, with the Ministry of Commerce warning against “a new case of protectionism”.

Bafang has also rebuked the allegations. “Besides many erroneous allegations in [EBMA’s] case in general, there are also incorrect allegations made about Bafang receiving heavy subsidies without any evidence,” it insisted.

The case of China’s e-bikes is seen as the first battle against new anti-dumping regulations that the EU introduced earlier last month.

China’s Ministry of Commerce argues that the new laws are “not in compliance with World Trade Organisation rules”. When China joined the WTO in 2001, it submitted to a number of conditions, including provisions that an importer could use a third country’s prices (an “analogue country”) to determine whether China was unfairly lowering the cost of its own products.

The Chinese argue that this condition was supposed to have been discontinued 15 years after joining the WTO (i.e. in December last year) and that different rules should now apply.

China has also insisted that the WTO conditions also guaranteed it would obtain market economy status automatically after 15 years.

But a month prior to the deadline date the EU submitted a draft proposal, passed in November, for new anti-dumping regulations that allow the analogue country assessment to continue. E-bikes will be the first case to be reviewed under the new system, if the EBMA’s suggestion of Switzerland as the price-proxy is accepted.

At the time being, the European Commission has maintained that its new rules are “country neutral”, meaning that they don’t correspond to a country’s market status but react to “significant distortions” in a producer’s economy.

According to the EUobserver, an online newspaper, 11 WTO countries including Russia and China have protested against the revised EU measures.

Bernd Lange, chair of the international trade committee in the European Parliament, was unsurprised by the backlash, declaring, “Some sectors in these countries are really not based on market price-building processes”. But a trade policy analyst at the Cato Institute told the EUobserver that if the new rules result in the same outcomes as the previous provisions, the Chinese might have a case against their application.

“I think China will have a good argument that the new methodology effectively carries over the old methodology, and therefore violates WTO obligations for the same reasons that the old one does,” the analyst said.

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