Proposal for a Council Regulation maintaining Council Regulation (EC) No 71/97 on the extension of the anti-dumping duty imposed on imports of bicycles originating in the People’s Republic of China to imports of certain bicycle parts from the People’s Republic of China
Date: 2008-01-28
Institutions: European Commission
Subjects: China, anti-dumping duty, anti-dumping legislation, import, originating product, two-wheeled vehicle

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.1.2008 
COM(2008) 36 final 

Proposal for a 

COUNCIL REGULATION 

maintaining Council Regulation (EC) No 71/97 on the extension of the anti-dumping 
duty imposed on imports of bicycles originating in the People’s Republic of China to 
imports of certain bicycle parts from the People’s Republic of China 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  384/96  of 
22 December 1995 on protection against dumped imports from countries not members 
of  the  European  Community,  as  last  amended  by  Council  Regulation  (EC)  No 
2117/2005  of  21.12.2005  (‘the  basic  Regulation’)  in  the  anti-dumping  review 
concerning  imports  of  essential  bicycle  parts  originating  in  the  People's  Republic  of 
China. 

•  General context 

This proposal is made in the context of the implementation of the basic Regulation and 
is the result of an investigation which was carried out in line with the substantive and 
procedural requirements laid out in the basic Regulation. 

•  Existing provisions in the area of the proposal 

Council Regulation (EC) No 71/97 extending the definitive anti-dumping duty imposed 
by  Regulation  (EEC)  No  2474/93  on  bicycles  originating  in  the  People's  Republic  of 
China  to  imports  of  certain  bicycle  parts  from  the  People's  Republic  of  China.  The 
amount of this extended duty is 48,5 %. 

•  Consistency with other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

Interested  parties  concerned  by  the  proceeding  have  already  had  the  possibility  to 
defend their interests during the investigation, in line with the provisions of the basic 
Regulation. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  foresee  a  general  impact  assessment  but  contains  an 
exhaustive list of conditions that have to be assessed. 

3)  LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

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On  28  November  2006,  the  Commission  initiated  an  ex  officio  review  of  the  anti-
circumvention  measure  in  force  in  respect  of  imports  of  essential  bicycle  parts 
originating in the People's Republic of China. 

The purpose of the review investigation was to examine whether there is continuation 
or  a  likelihood  of  recurrence  of  circumvention  of  the  anti-dumping  duty  on  bicycles 
originating in the People's Republic of China. 

The  investigation  found  that  no  circumvention  was  taking  place  but  established  that 
there  is  a  likelihood  of  recurrence  of  circumvention,  albeit  limited,  should  the  anti-
circumvention  measure  be  removed.  In  view  of  this  finding,  it  is  proposed  that  the 
measure is maintained.  

•  Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 2117/2005.  

•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reason: 

The form of action is described in the above-mentioned basic Regulation and leaves no 
scope for national decision. 

•  Choice of instruments 

Proposed instrument: Regulation. 

Other  means  would  not  be  adequate  because  the  basic  Regulation  does  not  foresee 
alternative options. 

4)  BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION 

maintaining Council Regulation (EC) No 71/97 on the extension of the anti-dumping 
duty imposed on imports of bicycles originating in the People’s Republic of China to 
imports of certain bicycle parts from the People’s Republic of China 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection 
against dumped imports from countries not members of the European Community1 (‘the basic 
Regulation’), and in particular Articles 9, 11(3) and 13(4) thereof, 

After consulting the Advisory Committee, 

Whereas: 

A. 

PROCEDURE 

1.  Measures in force  

(1) 

(2) 

In  September  1993,  the  Council,  by  Regulation  (EEC)  No  2474/932,  imposed  a 
definitive  anti-dumping  duty  of  30,6  %  on  imports  of  bicycles  originating  in  the 
People's  Republic  of  China  ('PRC').  This duty  was  increased  to  48,5  %  by  the  latest 
review, by Council Regulation No 1095/20053 ('the principal measure').  

In  January  1997,  following  an  investigation  into  the  alleged  circumvention  of  the 
above  anti-dumping  duty  in  the  form  of  assembly  of  bicycles  in  the  Community  by 
using Chinese bicycle parts, the Council, by Regulation (EC) No 71/974 extended the 
anti-dumping duty on bicycles originating in the PRC to imports of essential bicycle 
parts originating in the PRC, pursuant to Article 13 of the basic Regulation ('the anti-
circumvention  measure').  The  anti-circumvention  measure  also  stipulated  that  an 
exemption  scheme  should  be  established,  in  order  to  enable  assemblers  not 
circumventing  the  measure  on  bicycles  to  import  Chinese  bicycle  parts  free  of  anti-
dumping duty, by exempting them from the measure extended to bicycle parts.  

1 

2 
3 
4 

OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Council Regulation (EC) No 2117/2005 (OJ L 
340, 23.12.2005, p. 17). 
OJ L 228, 9.9.1993, p. 1. 
OJ L 183, 14.7.2005, p. 1. 
OJ L 16, 18.1.1997, p. 55. 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

In  June  1997,  the  Commission  adopted  Regulation  (EC)  No  88/975  on  the 
authorisation  of  the  exemption  of  imports  of  certain  bicycle  parts  originating  in  the 
PRC  from  the  above  extension,  thereby  laying  down  the  legal  framework  for  the 
operation of the exemption scheme ('the exemption scheme'). 

As a result of the above three measures, at present an anti-dumping duty of 48,5 % is 
in force on bicycles originating in the PRC, and this duty is extended to certain bicycle 
parts  originating  in  the  PRC,  but  Community  assemblers  not  circumventing  may  be 
exempted from the latter i.e. from the duty on bicycle parts. 

2.  Grounds for the review 

Since  the  extension  of  the  measures  to  imports  of  certain  bicycle  parts,  the 
Commission  has  granted  exemption  from  the  anti-circumvention  measure  to  a  large 
number  of  companies  based  in  the  Community.  The  Commission  has  continued  to 
receive  exemption  requests,  thus  the  number  of  parties  requesting  an  exemption  has 
significantly increased. At the same time, there have been no apparent indications of 
circumvention practices by companies having been granted an exemption. 

Furthermore, the Commission had at its disposal sufficient prima facie evidence that if 
the  anti-circumvention  measure  was  removed,  there  would  be  no  continuation  or 
recurrence of circumvention practices. 

In addition, the anti-circumvention measure has been in force for ten years and it has 
never been reviewed since its introduction. 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed for the initiation of a review in accordance with Article 13(4) and 11(3) of the 
basic Regulation, on 28 November 2006, the Commission initiated this review of the 
anti-circumvention measure, by publishing a notice of initiation in the Official Journal 
of the European Union6. 

3. 

Investigation  

(9) 

The  aim  of  the  investigation  was  to  assess  the  need  for  the  continuation  of  the  anti-
circumvention measure. 

3.1.  Investigation period 

(10)  The  investigation  covered  the  period  from  1 October  2005  to  30  September  2006 
('review investigation period' or 'RIP'). The examination of the trends relevant for the 
assessment  of  a  likelihood  of  a  continuation  or  recurrence  of  circumvention  covered 
the period from 2003 up to the end of the RIP ('period considered'). 

3.2.  Parties concerned by the investigation 

(11)  The  Commission  officially  advised  the  known  Community  assemblers  and  their 
associations  of  the  initiation  of  the  review.  Interested  parties  were  given  the 

5 
6 

OJ L 17, 21.1.1997, p. 17. 
OJ C 289, 28.11.2006, p. 15. 

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opportunity to make their views known in writing and to request a hearing within the 
time limit set in the notice of initiation. 

(12)  All interested parties, who so requested and showed that there were particular reasons 

why they should be heard, were granted a hearing.  

(13) 

In  view  of  the  apparent  large  number  of  Community  assemblers  involved  in  this 
review  investigation,  it  was  considered  appropriate  to  apply  sampling,  in  conformity 
with Article 17 of the basic Regulation. In order to enable the Commission to select a 
sample,  the  above  parties  were  requested,  pursuant  to  Article  17(2)  of  the  basic 
Regulation,  to  make  themselves  known  within  15  days  of  the  initiation  of  the 
investigation  and  to  provide  the  Commission  with  the  information  requested  in  the 
notice of initiation. 

(14)  A large number of Community assemblers – 158 companies – properly completed the 
sampling form and agreed to co-operate further in the investigation. Eight out of these 
158 companies, which were found to be representative of the Community industry in 
terms  of  volume  of  assembly  and  sales of bicycles in the Community, were selected 
for  the  sample.  The  eight  sampled  Community  assemblers  accounted  for  almost  one 
third  of  the  total  production  of  the  Community  industry  during  the  RIP,  whilst  the 
above 158 Community assemblers represented almost the totality of the production in 
the  Community.  This  sample  constituted  the  largest  representative  volume  of 
production  and  sales  of  bicycles  in  the  Community  which  could  reasonably  be 
investigated within the time available. 

(15) 

In accordance with Article 17(2) of the basic Regulation, the parties concerned were 
consulted on the sample chosen and raised no objection thereto. 

(16)  Questionnaires  were therefore sent to the eight sampled Community assemblers, and 

replies to the questionnaires were received from them. 

(17)  The  Commission  sought  and  verified  all  the  information  it  deemed  necessary  for  its 
analysis,  and  carried  out  verification  visits  at  the  premises  of  the  following  sampled 
Community assemblers: 

– 

– 

– 

– 

Planet'Fun S.A., Périgny, France; 

Decathlon Italia SRL, Milano, Italy; 

F.lli Masciaghi SPA, Basiano, Italy; 

Denver SRL, Dronero-Cuneo, Italy. 

B. 

PRODUCT UNDER REVIEW 

(18)  The product under review is essential bicycle parts: 

– 

– 

painted  or  anodized  or  polished  and/or  lacquered  bicycle  frames,  currently 
classifiable within CN code ex 8714 91 10, 

painted or anodized or polished and/or lacquered bicycle front forks, currently 
classifiable within CN code ex 8714 91 30, 

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– 

– 

– 

– 

– 

– 

– 

derailleur gears, currently classifiable within CN code 8714 99 50, 

crank-gear, currently classifiable within CN code 8714 96 30, 

free-wheel sprocket-wheels, currently classifiable within CN code 8714 93 90, 
whether or not presented in sets, 

other brakes, currently classifiable within CN code 8714 94 30,  

brake levers, currently classifiable within CN code ex 8714 94 90, whether or 
not presented in sets, 

complete  wheels  with  or  without  tubes,  tyres  and  sprockets,  currently 
classifiable within CN code ex 8714 99 90, and 

handlebars, currently classifiable within CN code 8714 99 10, whether or not 
presented with a stem, brake and/or gear levers attached, 

originating  in  the  People's  Republic  of  China  ('the  product  concerned').  The  above 
mentioned CN codes are only given for information.  

C. 

CIRCUMVENTION OF THE ANTI-CIRCUMVENTION MEASURES AND 

LASTING NATURE  

1. 

Legal framework 

(19) 

In order to assess the need for the continuation of the anti-circumvention measure as 
mentioned  above  in  recital  (9),  this  review  examined  whether  circumvention  in  the 
form  of  assembly  operations  was  taking  place  during  the  RIP,  and  whether  these 
circumstances were of a lasting nature. 

(20)  More specifically, it was examined whether the criteria for circumvention in the form 
of  assembly  operations,  as  laid  down  in  Article  13(2)  of  the  basic  Regulation,  were 
fulfilled during the RIP, and whether these criteria are likely to be fulfilled should the 
anti-circumvention measure be removed. 

(21)  For ease of reference, these criteria are set out below: 

"(a)  the  operation  started  or  substantially  increased  since,  or  just  prior  to,  the 
initiation  of  the  anti-dumping  investigation  and  the  parts  concerned  are  from  the 
country subject to measures; and 

(b) the parts constitute 60 % or more of the total value of the parts of the assembled 
product, except that in no case shall circumvention be considered to be taking place 
where  the  value  added  to  the  parts  brought  in,  during  the  assembly  or  completion 
operation, is greater than 25 % of the manufacturing cost; and 

(c)  the  remedial  effects  of  the  duty  are  being  undermined  in  terms  of  the  prices 
and/or quantities of the assembled like product and there is evidence of dumping in 
relation to the normal values previously established for the like or similar products." 

2. 

Existence of circumvention during the RIP 

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(22) 

It was examined whether during the RIP the Community assemblers circumvented the 
anti-circumvention measures in force.  

(23)  All  companies  co-operating  in  the  investigation  were  Community  assemblers 
exempted from the anti-circumvention measure, i.e. they could import and use Chinese 
bicycle parts for their bicycle assembly free of anti-dumping duty, if the proportion of 
such Chinese parts did not exceed 60 % of the total value of the parts of the assembled 
bicycles. The investigation showed that the sampled Community assemblers complied 
with this rule as it could not be found that their use of Chinese parts exceeded 60 %.  

(24)  After  the  evaluation  of  the  eight  sampled  Community  assemblers  and  of  the  158 
complete  sampling returns,  it was established that the average proportion of Chinese 
parts from the sampled eight assemblers was 37 %, i.e. far below the 60 % threshold. 
The  overall  proportion  of  all  cooperating  assemblers  was  even  lower  and  stood  at 
29 % during the RIP.  

(25)  The  above  proportions  for  the  years  2003,  2004  and  2005  are  shown  in  the  chart 

below:  

40%
35%
30%
25%
20%
15%
10%
5%
0%

2003

2004

2005

8 assemblers

150
assemblers

all

(26)  As one of the circumvention criteria was not fulfilled, these assemblers were found not 
to be circumventing the existing measures and to comply with the conditions related to 
their exemptions. 

(27)  The percentage of co-operating Community assemblers was very high, i.e. above 90 % 
in terms of volume of bicycles sold by EC assemblers, and no evidence was found that 
the  principal  measure  would  have  been  circumvented  by  other  bicycle  assemblers. 
Therefore, and in the absence of evidence pointing to the contrary, it can be concluded 
that no circumvention of the principal measure was taking place during the RIP.  

3. 

Lasting nature 

(28)  Pursuant to Article 11(3) of the basic Regulation, it was further examined whether the 
non-existence  of  circumvention  practices  would  be  of  a  lasting  nature,  i.e.  if 
circumvention  was  not  likely  to  recur  should  the  anti-circumvention  measure  be 
removed. 

3.1.  Start or substantial increase of the assembly operation 

(29) 

It  was  firstly  analysed  if  assembly  operations  would  start  or  substantially  increase 
following the removal of the anti-circumvention measure. In this respect, it is recalled 
that  during  the  initial  anti-circumvention  investigation  it  was  found  that  after  the 
imposition of the principal measures of Chinese bicycles in 1993, assembly of Chinese 

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bicycle parts substantially increased until 1997 when the anti-circumvention measure 
was  imposed.  There  were  significant  changes  in  the  pattern  of  trade:  imports  of 
Chinese bicycles dropped sharply, whereas imports of Chinese parts started to increase 
quickly.  This  past  experience  indicates  that  there  is  a  risk  that  in  the  absence  of  an 
anti-circumvention  measure,  imports  of  Chinese  parts  and  the  assembly  of  bicycles 
using these parts could substantially increase again. 

(30) 

In  addition,  the  investigation  has  shown  that  Chinese  bicycle  parts  are  in  general 
cheaper  than  bicycle  parts  of  any  other  origin.  Consequently,  if  some  Community 
assemblers would increase the use of Chinese parts, then others would probably also 
start using more Chinese parts, in order to stay competitive.  

(31) 

In view of the above, it cannot be excluded that the removal of the anti-circumvention 
measure  would  result  in  a  substantial  increase  of  imports  of  Chinese  parts  and  of 
assembly operations.  

3.2.  Criterion regarding the 60 % threshold of Chinese parts 

(32) 

(33) 

It  was  examined  whether  the  proportion  of  Chinese  parts  used  by  EC  assemblers  is 
likely to exceed 60 % of the value of all parts used in the assembly of bicycles, in case 
the anti-circumvention measure was removed.  

It is recalled that, as mentioned above in recital (24), the overall average proportion of 
Chinese parts was 29 % during the RIP, i.e. far below the 60 % threshold. The average 
proportion of the eight sampled producers was somewhat higher, 37 %.  

(34)  The investigation has revealed that the following may to a certain extent explain why 
EC assemblers used far lower proportions of Chinese parts than 60 % as allowed by 
the rules related to their exemption:  

–  Most importantly, each model of the exempted EC producers has to be in line 
with the 60 % rule, and the high quality models (where fewer, if any, Chinese 
parts are used) distort the average ratio of Chinese parts; 

– 

Constant fluctuations in prices of imported parts, transport costs and exchange 
rates and other practical reasons require a room of manoeuvre to be kept by the 
EC assemblers in order not to risk losing their right of exemption. 

(35)  However,  it  is  very  difficult  to  determine  whether  the  above  arguments  provide  an 
adequate explanation for the significant gap between the current proportion of Chinese 
bicycle parts used by EC assemblers and the 60 % limit allowed by the rules related to 
circumvention and to the exemption scheme.  

(36) 

(37) 

In addition, some of the Community assemblers claimed that they only imported less 
than 60 % of Chinese bicycle parts in order to comply with their obligations stemming 
from the exemptions granted to them.  

In fact, as already stated in recital (30), Chinese bicycle parts are in general cheaper 
than  bicycle parts of any other origin and for this reason the Community assemblers 
may start using more Chinese parts in order to keep pace with their competitors. 

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(38)  The picture is therefore somewhat mixed. On the one hand, in view of the substantial 
gap between the actual and the allowed proportion of Chinese parts used, the risk that 
the  bicycler  assemblers  would  exceed  the  60  %  threshold  in  the  short  term  does  not 
appear to be evident. 

(39)  On the other hand, in the medium term, Chinese bicycle assemblers would still have a 
rather  strong  incentive  to  import  more  than  the  60  %  limit  allowed  and  could  hence 
start  again  circumventing  the  principal  measure  by  way  of  exporting  to  the  EC  so-
called semi-knocked down kits or completely knocked down kits, i.e. almost complete 
bicycles in separate containers. This would actually bring back the circumvention that 
took place in the 1990s before the introduction of the anti-circumvention measure and 
would then result in a clear excess of the 60 % threshold. 

(40)  On balance, as the incentive to import more than the allowed 60 % threshold is indeed 
quite  strong,  it  appears  that  there  is  a  certain  risk  that  the  60  %  limit  would  be 
exceeded should measures be removed. 

(41)  As concerns the rule of the 25 % added value, which is an exception to the criterion 
regarding the 60 % threshold, it has been found that the average value added by the EC 
assemblers - on the basis of the 158 replies to the sampling forms - was 20 % during 
the  RIP.  As  concerns  the  eight  sampled  companies,  their  average  value  added  was 
22 % during the RIP. Given the low level of part production in the Community, this 
added value would most likely not surpass the 25 % threshold, in case the proportion 
of  Chinese  parts  exceeded  the  60  %  threshold.  Therefore,  it  is  unlikely  that 
Community assemblers would add more than 25 % value. 

3.3.  Undermining  of  the  remedial  effects  of  the  duty  in  terms  of  sales  prices  or 

quantities, and dumping 

(42) 

It  had  to  be  examined  if  the  remedial  effects  of  the  anti-dumping  duty  would  be 
undermined  and  if  dumping  would  recur  should  the  anti-circumvention  measure  be 
removed. However, in the current market conditions, i.e. when the anti-circumvention 
measure  and  the  related  exemption  scheme  exist,  it  was  impossible  to  carry  out  a 
reasonable analysis if the duties would be undermined in terms of sales prices and if 
dumping would exist, because for the calculation EC prices should have been based on 
a situation where bicycles were composed solely from Chinese parts. In contrast, EC 
bicycles assembled during the RIP were made of parts of various origins including the 
EC, the PRC and other third countries.  

(43) 

It  is  however  recalled  that  during  the  investigation  leading  to  the  anti-circumvention 
measure in 1997 it was proved that the remedial effect of the duty on Chinese bicycles 
was  undermined  in  terms  of  sales  prices,  and  dumping  existed.  In  the  absence  of 
comparable  prices  during  the  RIP,  the  findings  of  this  earlier  investigation  for 
undermining  and  dumping,  as  set  out  in  recitals  19  to  24  of  the  anti-circumvention 
measure, remain valid.  

D. 

CONCLUSIONS 

(44)  The  review  has  shown  that  currently  no  circumvention  appears  to  be  taking  place. 
However,  it  has  also  shown  that  the  risk  of  recurrence  of  circumvention  cannot  be 
fully excluded. On the basis of the analysis carried out above, there seems to be a risk, 

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though  limited,  that  in  the  medium  term,  the current  non-existence  of  circumvention 
will  not  last  should  the  anti-circumvention  measure  be  removed,  as  Community 
assemblers  could  substantially  increase  assembly  operation  by  using  more  Chinese 
bicycle  parts  than  the  60  %  threshold,  which  would  then  undermine  the  remedial 
effects of the anti-dumping duty on Chinese bicycles.  

(45)  Therefore, the anti-circumvention measure shall be maintained, in order to ensure that 
the principal measure i.e. the anti-dumping duty on bicycles is effective and cannot be 
undermined by circumvention in the form of assembly operations, 

HAS ADOPTED THIS REGULATION: 

Article 1 

The  extension  of  the  antidumping  duty  imposed  on  imports  of  bicycles  originating  in  the 
People’s  Republic  of  China  to  imports  of  certain  bicycle  parts  originating  in  the  People’s 
Republic  of  China  by  Council  Regulation  (EC)  No  71/97,  is  hereby  maintained,  and  the 
review concerning these imports is terminated. 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the Council 
The President 

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