Council Regulation (EC) No 171/2008 of 25 February 2008 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: 2008-02-25
Institutions: Council of the European Union
Subjects: China, anti-dumping duty, anti-dumping legislation, import, originating product, two-wheeled vehicle

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC) No 171/2008

of 25 February 2008

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
Community,

establishing the European

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 Community (1)
(the basic Regulation), and in particular Articles 9, 11(3) and
13(4) thereof,

After consulting the Advisory Committee,

Whereas:

(1)

(2)

A. PROCEDURE

1. Measures in force

In September 1993, the Council, by Regulation (EEC) No
2474/93 (2), 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 (EC)
No 1095/2005 (3) (the principal measure).

following an investigation into the
In January 1997,
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 Regu-
lation (EC) No 71/97 (4) 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

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17).

(2) OJ L 228, 9.9.1993, p. 1.
(3) OJ L 183, 14.7.2005, p. 1.
(4) OJ L 16, 18.1.1997, p. 55.

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.

In June 1997, the Commission adopted Regulation (EC)
No 88/97 (5) 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 signifi-
cantly increased. At the same time, there have been no
apparent
circumvention practices by
companies having been granted an exemption.

indications of

the Commission had at

its disposal
Furthermore,
sufficient prima facie evidence that
the anti-circum-
vention measure was removed, there would be no conti-
nuation or recurrence of circumvention practices.

if

(3)

(4)

(5)

(6)

(5) OJ L 17, 21.1.1997, p. 17.

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(7)

(8)

In addition, the anti-circumvention measure has been in
force for 10 years and it has never been reviewed since
its introduction.

after

determined,
that

consulting
sufficient evidence existed for

the Advisory
Having
Committee,
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 Union (1).

the production in the Community. This

the 158
Community industry during the RIP, whilst
Community assemblers represented almost the totality
sample
of
constituted
of
production and sales of bicycles in the Community
which could reasonably be investigated within the time
available.

representative

volume

largest

the

(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.

3. Investigation

(9)

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

(16) Questionnaires were therefore sent to the eight sampled
Community assemblers, and replies to the questionnaires
were received from them.

(10)

(11)

3.1. Investigation period

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

advised

Commission

The
officially
known
Community assemblers and their associations of
the
Interested parties were given
initiation of
the opportunity to make their views known in writing
and to request a hearing within the time limit set in the
notice of initiation.

the review.

the

(12) All interested parties, who so requested and showed that
there were particular reasons why they should be heard,
were granted a hearing.

(13)

the basic Regulation.

In view of the apparent large number of Community
assemblers involved in this review investigation,
it was
considered appropriate to apply sampling, in conformity
In order to
with Article 17 of
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 cooperate further in the investigation.
Out of these 158 companies eight, 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
sampled Community assemblers accounted for
eight
the
almost one

total production of

third of

the

(17)

The Commission sought and verified all the information
it deemed necessary for its analysis, and carried out veri-
fication 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,

— derailleur gears, currently classifiable within CN code

8714 99 50,

— crank-gear, currently classifiable within CN code

8714 96 30,

— free-wheel

sprocket-wheels,

classifiable
within CN code 8714 93 90, whether or not
presented in sets,

currently

(1) OJ C 289, 28.11.2006, p. 15.

— other brakes, currently classifiable within CN code

8714 94 30,

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

investigation and the parts concerned are from the
country subject to measures; and

— complete wheels with or without tubes, tyres and
currently classifiable within CN code

sprockets,
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). These CN codes are only given
for information.

C. CIRCUMVENTION OF THE ANTI-
CIRCUMVENTION MEASURES AND LASTING
NATURE LASTING NATURE

(22)

1. Legal framework

(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 prices and/or quantities of

the remedial effects of the duty are being undermined
the
in terms of
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

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

circumvented

the

(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

(23) All companies cooperating in the investigation were
Community assemblers exempted from the anti-circum-
vention 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:

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(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.

value of all parts used in the assembly of bicycles, in case
the anti-circumvention measure was removed.

(27)

The percentage of cooperating 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
evidence pointing to the
contrary, it can be concluded that no circumvention of
the principal measure was taking place during the RIP.

absence of

3. Lasting nature

(28)

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

i.e.

3.1. Start or substantial increase of the assembly operation

(33)

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,

(29)

(30)

(31)

it

respect,

In this

It was firstly analysed if assembly operations would start
or substantially increase following the removal of the
anti-circumvention measure.
is
recalled that during the initial anti-circumvention inves-
tigation it was found that after the imposition of the
principal measures of Chinese bicycles
in 1993,
assembly of Chinese bicycle parts substantially increased
until 1997 when the anti-circumvention measure was
imposed. There were significant changes in the pattern
imports of Chinese bicycles dropped sharply,
of trade:
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.

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.

In view of the above,
removal of
result in a substantial
parts and of assembly operations.

it cannot be excluded that the
anti-circumvention measure would
imports of Chinese

increase of

the

3.2. Criterion regarding the 60 % threshold of Chinese parts

(32)

It was examined whether the proportion of Chinese parts
used by EC assemblers is likely to exceed 60 % of the

fluctuations in prices of

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

costs

rates

(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)

(38)

In addition, some of the Community assemblers claimed
they only imported less than 60 % of Chinese
that
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
reason the Community
this
assemblers may start using more Chinese parts in order
to keep pace with their competitors.

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 bicycle assemblers would exceed the 60 %
threshold in the short
term does not appear to be
evident.

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(43)

(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-circum-
vention 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.

(44)

(41) As concerns the 25 % added-value rule, 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
their average
concerns the eight sampled companies,
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 the event that the proportion of Chinese parts were to
exceed the 60 % threshold. Therefore, it is unlikely that
Community assemblers would add more than 25 %
value.

is, however,

the remedial effect of

recalled that during the investigation
It
leading to the anti-circumvention measure in 1997 it
the duty on
was proved that
sales
Chinese bicycles was undermined in terms of
absence of
existed.
prices,
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.

and dumping

In the

D. CONCLUSIONS

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, though limited, that in
the medium term, the current non-existence of circum-
should the anti-circumvention
vention will not
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.

last

(45)

Therefore, the anti-circumvention measure shall be main-
tained, 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,

3.3. Undermining of the remedial effects of the duty in terms

of sales prices or quantities, and dumping

HAS ADOPTED THIS REGULATION:

(42)

It had to be examined whether the remedial effects of the
anti-dumping duty would be undermined and whether
should the anti-circumvention
dumping would recur
measure be removed. However,
in the current market
i.e. while the anti-circumvention measure
conditions,
and the
it was
related exemption scheme
impossible to carry out a reasonable analysis whether
the duties would be undermined in terms of
sales
prices and whether dumping would exist, because for
the calculation EC prices should have been based on a
situation where bicycles were composed solely of 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.

exist,

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 Regulation (EC) No 71/97, is hereby maintained, and
the review concerning these imports is terminated.

Article 2

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

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

Done at Brussels, 25 February 2008.

For the Council
The President

A. VIZJAK