Last week’s General Disclosure Document outlines duties of up to 79.3% ad valorem for e-bikes imported from China. The move will threaten further development of clean mobility, lead to supply shortages and price increases, and destroy the livelihood of dozens of European importing SMEs.
The Commission’s draft decision (GDD) constitutes the preamble to definitive duties due before the end of the year. LEVA-EU and the Collective of European Importers of Electric Bicycles have systematically decried this unfair and absurd case rigged with several
fundamental inconsistencies:
There is no proof of injury, and the threat of injury does not justify the imposition of duties. The Commission examined the EU industry performance in the period 2014-2017, finding +28% production volume, +34% production capacity, +20% sales volumes, +40% employment for the EU industry (GDD pp. 14-16). The loss of market share is the only argument the Commission would have, but this
argument is based on allegedly illegally obtained Chinese statistics.
The Commission will hit dozens of European SMEs for the minimal profit increase of European manufacturers. The only reason why the Commission is imposing the duties is because the European e-bike industry had a profitability of 3.4% in 2017, instead of 4.3%, which is a target profit randomly decided on by the Commission (GDD Recital 165). What’s more, the Commission openly states (GDD Recital 141) its willingness to sacrifice what they call “small importers” for this purpose.
There is a wilful misinterpretation of survey data by the Commission. An online survey conducted by LEVA-EU showed that the proceedings were causing EU importers considerable damage. LEVA-EU collected further and more detailed information on this damage from 14 European importers in the Collective. From all this, LEVA-EU estimated that the ongoing proceedings alone had caused the European importers €90 to €100 million unanticipated costs on top of the provisional duties. This was presented to the Commission at a hearing, but in the GDD the Commission published a completely false report on these surveys. This allowed the
Commission to come to the distorted conclusion that adverse effects on importers would be mitigated by the availability of e-bikes from other markets (GDD Recital 138), a fundamentally flawed conclusion.
LEVA-EU Manager Annick Roetynck stated: “We strongly condemn the Commission’s findings. This case was started because EU “manufacturers” are unable to cope with changing distribution patterns and growing competition. They are only looking to close the market, and the Commission is helping them even though there is no dumping and clearly no injury to European manufacturers. If the Commission goes ahead with the proposed duties, this will exacerbate the damage already done to European importers and mark the start of dark days for the whole European electric bicycle sector, EU climate targets, and for all EU citizens who are using or intend to use an electric bike.”
In a jubilant press release, EBMA welcomes the Commission’s intention to impose duties as the right measures to stop “injury to European e-bike manufacturers, as Chinese e-bikes have flooded the EU at an alarming rate and artificially low prices”. This is the introduction to a stream of fake news.
According to EBMA, “the concealed costs of Chinese e-bikes and the injury to European industry and jobs are now revealed. Definitive trade defence measures will shield 90,000 EU workers and over 800 SME’s against unfair competition from China.”
The EBMA membership list published in 2013 in the Belgian Official Journal held 17 companies, none of them SME’s (<250 staff). Some of these companies don’t produce electric bicycles, others import electric bicycles from China and some have ceased to exist. That is who EBMA is representing, not even all 31 producers identified by the Commission as the Community Industry (Recital 65). EBMA has no right to speak in the name of “90,000 EU workers and over 800 SME’s” for the simple reason that there are no 90,000 workers and over 800 SME’s in the EU electric bike business.
The SME’s are on the importing and distributing side. There may be a few companies with more than 250 employees importing electric bicycles from China, but not many, the absolute majority are SME’s and according to our estimates there are around 150 importers.
EBMA’s fake news mentioning 90,000 EU workers and over 800 SMEs is completely in line with the collection of alternative facts that made up the complaint. The complainants are unknown; their identity had to be kept confidential to protect them from unknown risks and dangers. The dumping was established based on presumably illegally obtained statistics. The source of these statistics had to be kept confidential to protect the provider from unknown risks and dangers. These statistics allowed establishing a shrinking market share for the Union Industry. That shrinking market share is the only injury that could be established. All other economic performance indicators for the Union Industry were up.
Another mind blowing statement in the press release is that “Even, the European Cyclists’ Federation representing consumers is against dumping because of its negative role in the development of electric bicycles, and as a consequence on the transition to a greener Europe.” In other words, the association representing European consumers agrees with measures that will reduce the offer, increase the prices and get in the way of innovation? We can only hope that ECF has checked out the proceedings properly to ensure that dumping + injury are real. And we also hope that EBMA has carefully consulted with ECF before making this remarkable position public.
The Commission’s Disclosure Document also discloses astonishing false allegations by EBMA. Recital 28 is about whether electric bicycles with assistance up to 45 km/h (speed pedelecs) should be excluded from the product scope. EBMA claims that electric bicycles with assistance up to 45 km/h (speed pedelecs) must be included in the product scope because otherwise a “massive risk of circumvention of anti-dumping and anti-subsidy measures” may arise. These allegations are aimed at “economic operators (importers, traders)”, who may well import speed pedelecs and subsequently alter their software to limit them to 25 km/h.
EBMA’s allegations addressed at importers and traders are intellectually dishonest, totally outrageous and grotesque. The most outrageous and grotesque aspect of the allegations is that EBMA, even before the final decision of the Commission in the anti-subsidy and anti-dumping proceedings, has the guts to insinuate that importers and traders will be circumventing. It is intellectually dishonest because speed pedelecs and electric bicycles with pedal assistance up to 25 km/h are subject to two sets of very different, technical requirements. Building a speed pedelec following one set of technical rules and then put it on the market as a 25 km/h conforming with another set, can by no means ever be profitable.
This concludes our anthology of fake news, alternative facts and fake allegations as produced by EBMA in this case.
The Commission has sent the disclosure document for the anti-dumping proceedings to all interested parties, including the European Collective of Importers of Electric Bicycles. This document does not hold a final decision yet, but outlines what the Commission intends to do.
In the disclosure document, the Commission is announcing the imposition of anti-dumping duties as listed in the table at the end of this article.
With that, the Commission intends to accept EBMA’s request to withdraw registration and therefore not to pursue the retro-active collection of duties. However, this will only be 100% confirmed when the final Regulation on the case is published.
Provisional duties will be collected from 18 July onwards, but only to the level of proposed duties, which is lower than the provisional duties.
All interested parties can send comments to the Commission on this disclosure document until 12 o’clock on 26 November.
The Collective of European Importers of Electric Bicycles will comment on the content of this disclosure document upon careful analysis. However, the Collective already wishes to state now that if the Commission is to go ahead with the proposed anti-dumping duties, this will exacerbate the damage already done to European importers and mark the start of dark days for the whole European electric bicycle sector and for all EU citizens who are using or intend to use an electric bike.
Jinhua Vision Industry Co., Ltd and Yongkang Hulong Electric Vehicle Co., Ltd.
18,8 %
Suzhou Rununion Motivity Co., Ltd.
79,3 %
Yadea Technology Group Co., Ltd
62,9 %
Other co-operating companies in the anti-dumping investigation which also co- operate but were not sampled in the parallel anti-subsidy investigation (Annex I)
33,5 %
Other co-operating companies in the anti-dumping investigation, but not cooperating in the parallel
anti-subsidy investigation (Annex II)
33,5 %
Non-cooperating companies in the anti-dumping investigation, but cooperating in the parallel
Bike Europe’s announcement of 79% anti-subsidy and anti-dumping duties on China e-bikes is MANIFESTLY INCORRECT.
In an article published on the Bike Europe website today, the trade magazine states the European Union has the intention to impose “an overall combined anti-dumping and anti-subsidy duty of 79.3 percent on the import of e-bikes made in China“. This is absolutely incorrect and not true.
The European Commission has indeed issued a DRAFT proposal but only for the anti-subsidy case, NOT for the anti-dumping case. This draft holds no statements about imposing anti-dumping duties and certainly no intention of 79% duties. It only informs all interested parties of a draft decision to impose countervailing duties of a maximum of 16.4% and the reasons for this. All interested parties now have a set period to argue for or against this draft, upon which the Commission must take a final decision by January 2019 at the latest.
The Commission will publish a similar draft for anti-dumping duties but this is expected toward the end of November, early December.
LEVA-EU finds it extremely regrettable that Bike Europe has so far not responded to the association’s request to either correct the article or to remove it from the website so that the incorrect information would not cause any further unnessary chaos and panic among Chinese and European companies that have already been damaged very severely by the proceeding itself. LEVA-EU also finds it extremely regrettable that this article is simply based on incorrect conclusions drawn from an MLex article, instead of on double-checking the facts with the interested parties.
The growing European e-bike market, currently estimated at 2 million bikes a year, is under threat from a European Commission anti-dumping investigation against e-bike imports from China. The imposition of provisional duties up to 83.6% are disrupting supply chains and increasing prices for consumers, and the threat of definitive duties seriously could harm the availability of affordable e-bikes, just as they are rising in popularity.
If your company has imported electric bicycles from China between 4 May and 18 July, then you could potentially be subject to retroactive collection. Even though EBMA has withdrawn its request for registration, the Commission still has the competence to apply retroactive collection of duties. The Commission must annul the registration by a separate measure to stop the process. However, the Commission plans only to consider the request “in the final assessment of this case“. This means that the threat of retroactive collection continues for all companies having imported electric bicycles from China between 4 May and 18 July.
A while ago, two members of the Collective have initiated a lawsuit against the Commission’s decision on registration. This lawsuit has been officially published in the European Official Journal of 24 September. The Collective is continuing this court application against registration, since it is the only solution to offer importers the best possible protection from retroactive collection.
Should the court case prove to be necessary and successful, only companies that have come forward as intervenors will be able to obtain exemption from the retroactive collection of duties. That is why the Collective is giving importers, who may get hit by registration and are not part of the Collective, the opportunity to join the legal initiative by coming forward as intervenors.
LEVA-EU strongly recommends all companies, having imported from China between 4 May and 18 July, to come forward as an intervenor in the lawsuit against the Commission. Companies who wish to join this initiative should immediately contact LEVA-EU Manager, Annick Roetynck, (tel. +32 9 233 60 05 , email leva-eu@telenet.be) for further information on the terms and conditions to become an intervenor. They will need to provide some documents by 29 October.
In a letter, dated 8 October, the European Bicycle Manufacturers’ Assocation (EBMA) has informed the European Commisson that they wish to withdraw their request for registration of imports.
EBMA had introduced this request earlier this year, upon which the Commission published a Regulation on 2 May 2018 in which they confirmed the registration. This created the possibility for retroactive collection of duties between 4 May and 19 July 2018. In that period quite a number of European companies still had containers on the water. To them, the potential retroactive collection of duties hung like a sword of Damocles over their head.
To officially end the registration, the Commission must publish a new Regulation. That publication would finally put an end to potential retroactive collection, which would come as a huge relief to many companies in Europe.
The EBMA letter comes shortly after the third hearing the Collective of European Importers of Electric Bicycles had with the Commission. In that hearing, they presented the Collective’s calculations on the injury to importers directly resulting from the proceeding itself. According to the Collective’s estimates, that injury amounts to an average of € 605,000 per company. Based on a very conservative assumption of around 150 importing companies in Europe, that would mean that the total injury caused by the proceedings alone already amounts to more than € 90 million. This amount does not include provisional duties or potential retroactive collection.
It is unclear whether there is a link between the Collective’s statements on injury at the hearing and EBMA’s decision to withdraw the request for registration. It will, in any case, come as a great relief for many companies.
René Magritte’s painting, “Ceci n’est pas une pipe”, caused quite a stir at the time. Magritte stated that he would be lying if he called it a pipe because his painting was only a representation of a pipe. By analogy with Magritte, the dumping case against electric bicycles from China should not be called a dumping case, but a representation of a dumping case. However, truth needs to be more and more touched up to make it resemble a dumping case. This is again apparent from the Regulation of 18 July through which the European Commission has imposed provisional duties. A selection of the incongruities in that text, against which the Collective has officially protested once again.
For now, the Commission concludes that electric bicycles from China are being dumped and that European industry suffers injury as a result. The extent of the injury is such that provisional duties are necessary to prevent further deterioration.
Expressed in figures, the “damage” to European industry from 2014 to 30 September 2017 is as follows:
– Sales volume: + 21%
– Production volume: + 29%
– Production capacity: + 35%
– Capacity utilization: -4%
– Employment: + 40%
– Labour costs: -10%
– Profitability: + 25%
– Investments: + 77%
– Return on investment: + 103%
As for the only negative result in this list, capacity utilization, the Commission itself states that the relevance of this indicator is limited because production lines can be used for both conventional and electric bicycles (recital 172).
Fitting the numbers to the story
Against all logic and sense, the Commission has managed to conclude from all the above that the European industry is suffering injury. This is how the system apparently works. Whilst, according to the Regulation, the sales volume of the European industry increased by 21% between 2014 and 30 September 2017, total consumption grew by 74%. As a result, sales’ share of the European industry declined in theory from 76% to 53% in that period, and that was due to the alleged harmful, growing imports from China, according to the Commission.
With that however, it appears that figures are sometimes inexplicably adjusted upwards or downwards to fit the story of injury. One obvious example of this is profitability mentioned in recital 192. The Commission interprets the evolution of this indicator as follows: “Starting from a low base of 2,7 % in 2014, profits margins eroded from 4,3 % in 2015 to 3,4 % in the investigation period.” (Recital 194) If an increase of profit margins by 25% is referred to as “eroding“, then one must seriously question whether any argument can be raised at all against the Commission’s determination to prove dumping.
Mathematically impossible
But there’s more. The Commission does not mention what profitability has been established at the verification visits of the sampled producers. These percentages are shown in the table below.
2014
2015
2016
IP
Accell Group
100
194
223
189
Derby Cycle Holding GmbH
100
148
204
193
Eurosport DHS SA
100
707
2,222
2,795
Koninklijke Gazelle NV
100
431
236
332
Prophete GmbH & Co. KG related company to Eurosport DHS SA
100
68
81
118
% Profit Determined in Provisional Regulation
100
160
142
125
Source: EU Sampled Producers Questionnaires After Verification
The above stated profitability of Accell, Derby and Konkinklijk Gazelle is set out in the graph below.
Chart 1: Comparison of Profitability Trends Reported by the Sampled EU Producers Compared to Profitability Established in the provisional Regulation (IIP)
Source: EU Sampled Producers Questionnaires After Verification and Provisional Regulation Table 11
Index 2014 = 100
This graph clearly shows that an increase of only 25%, as stated by the Commission, is mathematically impossible. The lack of consistency permeates the whole Regulation and reaches a culmination in recital 177 where the Commission concludes that “The Union Industry had to reduce its production, sales, employment and capacity between 2016 and the investigation period due to dumped imports from the PRC.” Once again, we question why the Commission makes a comparison between 2016 and the investigation period. In that period, production declined by a modest 1.7%, sales by 3%, production capacity by 9.2%, while employment grew by 1.8%. For the entire period however, these factors were respectively 29%, 21%, 40% and 35% higher on 30 September 2017 than on 1 January 2014.
More inconsistent numbers
In addition to the fact that several numbers in the complaint and the Regulation do not match, there is also an inconsistency in the production figures used. Nevertheless, both the Regulation and the EBMA complaint refer for these to the same source: EBMA’s sister organization CONEBI. In its very first position, the Collective has pointed out this inconsistency, but has never received any response to this.
EU Industry Production
2014
2015
2016
IP
CONEBI website
1,030,000
1,164,000
EBMA complaint
856,000
1,023,000
1,004,000
1,025,000
Regulation
842,531
987,111
1,108,087
1,089,541
EBMA complaint index
100
120
117
120
Regulation index
100
117
132
129
Prejudiced Commission
Another remarkable finding in the Commission’s Regulation, in the framework of the injury to the European industry is that during the investigation period four European producers have gone bankrupt. This is communicated at the end of recital 204, which provides details of the detrimental effects of Chinese dumping on European producers. In fact, in this Regulation, the Commission insinuates twice that the bankruptcies are the result of dumping. Since the Commission omits to mention who the manufacturers concerned are, it is impossible to check this statement for accuracy.
With this, the Commission proves itself prejudiced and not for the first time. In the Registration Regulation for instance (Recital 14), the Commission argued that the importers were are or should have been aware that there was dumping at the start of the proceeding. Hence, the Commission implies in no uncertain terms that there is effective dumping at a moment when the investigation is still in full swing. This means, therefore, that the accused are found guilty before their guilt has been proven, which is in direct contradiction to the indisputable legal principle that someone is innocent until proven guilty.
Commercial advice
Under the heading “6.3.Interest of unrelated importers” there are some further remarkable points. The Commission extensively argues that for importers of electric bicycles from China, the alternatives for supply are plentiful. Of the 450 bicycle manufacturers in Europe, there are still only 37 who produce electric bicycles. In other words, there are hundreds of European bicycle producers left who could help out the importers, whilst the 37 existing electric bike producers can still allegedly expand their capacity. What’s more: “The import statistics show that Vietnam and Taiwan supplied substantial quantities of electric bicycles to European importers. It is also likely that other countries with a strong position in the production of ordinary bicycles could potentially supply importers.” (Recital 239) This despite the fact that the Commission could not find a single producer from any of these countries to cooperate and provide data to assist it in the dumping calculations.
An objective analysis in a dumping case does not, in our view, require commercial advice to affected importers. A dumping procedure is an instrument to remedy a temporary abuse in international trade, not to convince importers to stop supplying themselves from the accused country! This is not the first time that importers are confronted with such commercial advice from the Commission.
Obstinate refusal
In doing so, the Commission once again ignores the information provided by the Collective on the relationship between the importers and their suppliers in China. These importers develop, brand and market their own bicycles, which they have produced in China, because a complete supply chain is available there and because they have built relationships with their suppliers for many years. Consequently, the Commission refuses to apply the necessary adjustments in order to calculate normal value and obstinately adheres to the OEM level of trade: ” (…) the Commission did not find any consistent and distinct difference in functions and prices of the Union industry between their OEM and non-OEM sales on the Union market at the level of product types, within the meaning of Article 2(10)(d)(i) of the basic Regulation. Article 2(10)(d)(ii) of the basic Regulation was equally inapplicable as the relevant level of trade – OEM – does exist on the domestic market of Union producers.” (Recital 115) We repeat that the sample of EU producers consists of Accell, Gazelle, Derby and oh, yes, Eurosport with its related importer Prophete, which was included without further explanation after the sample of producers was decided on and communicated.
65 companies, 1,000 people
The Commission puts forward further arguments for the claim that there are few reasons for importers to worry: the imposition of duties could only “have an adverse effect on a number of mainly small importers” (Recital 242). Upon publication of the Registration Regulation, LEVA-EU carried out a small Internet survey about possible injury caused by the proceeding to importing companies. 72 companies have completed the survey of which 65 (= 90%) confirm that the proceeding is causing actual damage to their business. The reported damage is significant and diverse:
Almost 42% is short of product to sell, in the height of the season;
39% state that they already had to increase the price of their products;
5% have suffered financial loss since the initiation of the dumping proceeding;
33% have stopped import of electric bikes from China and have not found an alternative solution;
6% state that their company will have to close down if retro-active collection is imposed;
21% will not continue if definitive duties are imposed;
Almost 21% had to lay off staff.
According to the Commission, the EU Industry currently consists of 37 companies. It is difficult to understand how stated damage to 65 companies, employing more than 1,000 people can be so simply dismissed by the Commission with the cursory understatement that final duties “could have an adverse effect on a number of mainly small importers”. Furthermore, the damage is occurring now, while the proceeding is ongoing and the accused have not been found guilty yet.
Injury kept quiet
Ceci n’est pas un cas de dumping. This is a political game which fits with the current, general European attitude to discourage trade with China. Furthermore, a very small number of large companies in Europe try, through abuse of trade defence instruments, to push competition out of those markets they have lost out on due to their own rigidity and short-sightedness.
On the 20th July, Bike Europe reported on Accell’s outlook for the rest of 2018 as follows: “Accell Group expects continued turn-over growth in the second half of 2018, driven by higher sales or e-bikes and high-end regular bikes. Working capital at year-end 2018 is expected to be a major improvement, compared with the end of June 2018.” And CEO Ton Anbeek commented: “Based on these developments, we expect the group to record an increase in net turn-over and a higher operating result for the full year 2018, barring unforeseen circumstances.”
If there is injury to the European industry through dumping, then surely Accell must be among the most injured. How is it that Ton Anbeek, or any other Accell, Derby, Cycleurope, Decathlon, … executives, in their business analyses for the press, have never mentioned this with one word? Perhaps the press should finally ask them that question.
In the meantime, the Collective is continuing its fight against this case. The group has requested a hearing with the Hearing Officer with a view to addressing the infringement of their right to defence in this and previous Regulations. Furthermore, the Collective is awaiting a decision on the admissibility of the lawsuit initiated against the European Commission.
Annick Roetynck,
LEVA-EU Manager
(The above image represents a painting by René Magritte, which represents a pipe)
LEVA-EU and the Collective of Importers deeply regrets Brussels’ decision to impose provisional duties which may well deal a decisive blow to several European companies in the e-bike market, limiting consumer’s choice and forcing Europeans to foot the bill.
A final decision on definitive duties, whether or not to be retroactively collected is expected around the end of this year. LEVA-EU and the Collective are determined to continue to fight this case. LEVA-EU Manager Annick Roetynck states: “This is only one battle lost, we haven’t lost the war. From our first analysis, we conclude that the Regulation holds many inconsistencies and omissions. All these will be thoroughly addressed in the Collective’s official response to the Regulation.”
What’s happening? Following a complaint brought by the European Bicycle Manufacturer’s Association (EBMA) on 8 September, the European Commission opened an investigation into imports of e-bikes from China on 20 October 2017. This complaint as well as the procedure are heavily contested by a Collective of 22 importers, managed by LEVA-EU. Since 4 May 2018, the European Commission imposed the registration of all new e-bike imports with the competent custom authorities. The imposition of today’s provisional duties of up to 83.6% opens the door to definitive duties, that could be imposed around the end of this year and which may or may not be collected retroactively from the registration date onward.
The Commission’s provisional duties are absurd as so far no evidence of dumping has been established:
The complainant has failed to prove any injury to the European e-bike industry. All so-called European manufacturers have seen double digit growth over the last few years and are bound to continue profiting from this expanding market.
Most e-bike components are imported from China, and then only assembled by European “manufacturers”. This assembly procedure amounts to €25 to €35, and that is the only difference between so-called European “manufacturers” and “importers”.
The Commission will only decide if and what proportion shall be collected in its final decision. However the registration, which includes the threat of retroactive collections, already has a devastating effect on European e-bike businesses and on jobs, and will only be exacerbated by the provisional duties. Since the registration European importers are in turmoil, left with total uncertainty as to what to base on their short and longer term business plans. Many of these companies may find it difficult if not impossible to obtain the bank guarantee, necessary to avoid effective payment of provisional duties.
Annick Roetynck, LEVA-EU Manager, said: “This is a clear case of abuse of trade defence instruments for protectionist reasons, and importers have been punished before a verdict has even been reached. This baseless and opaque procedure is severely injuring many small and medium sized European businesses as well as the growing e-bike market in Europe. We filed an application for annulment of the registration regulation with the General Court of the EU on Tuesday 10 July. Nevertheless, the Commission seems to be determined to go ahead with this procedure and working towards the impositions of definitive duties, despite having violated the importers’ due process on several occasions already.”