In our blog from two weeks back on origin and provenance, the term was already briefly mentioned, anti-dumping duties. Chances are you have already heard this term. For example, when the European Commission imposed anti-dumping duties on "cheap" e-bikes from China. Still, its meaning will be hazy or even unknown to many. That is why this blog is dedicated to the term anti-dumping duties. The following questions will be answered in the blog:
- What is dumping?
- What are anti-dumping duties, and what are they used for?
- What is the importance of the origin? What is dumping?
Before explaining what the term anti-dumping duties means, it is wise to first explain what is meant by dumping. Dumping is an international phenomenon in which exporters put goods on a foreign market - such as the European market, for example - at a lower price than what the goods are put on their own market - China, for example. This was the case with e-bikes from China. Chinese e-bikes were much cheaper than European e-bikes, and were therefore brought to the European market in large numbers by exporters from China. Great for consumers, cheaper goods. However, the European Commission and European suppliers thought otherwise. The cheap Chinese e-bikes flooded the European market causing a distortion of the internal European market. Thus, European suppliers were greatly disadvantaged because they could not bring its own e-bikes to the market at the same low price as the Chinese variants. What are anti-dumping duties, and what are they used for?
To counteract dumping by exporters, countries impose anti-dumping duties. Thus, this was the case with e-bikes from China. The European Commission imposed anti-dumping duties to prevent further distortion and restore balance. These anti-dumping duties were as high as 79.3% for certain Chinese exporters. Anti-dumping duties are not limited to e-bikes or exporters of e-bikes. There are also examples of anti-dumping duties on solar panels, steel, chips, A4 paper, etc. Within the European Union, it is the European Commission that will initiate proceedings regarding the possible imposition of anti-dumping duties. This is usually done following a written complaint of dumping from or on behalf of a specific Union industry. Countries outside the European Union also use anti-dumping duties. Disputes about this can arise between countries. To resolve this, dispute resolution can take place at the WTO (World Trade Organization).
What is the importance of the origin?
As already discussed in our blog from two weeks back, in order to determine customs tariffs it is important to find out whether the goods are of preferential or non-preferential origin. Similarly, we indicated that if the goods are of non-preferential origin that they may be subject to anti-dumping duties. So in the example of e-bikes, the e-bikes from China were of non-preferential origin. However, this can be tampered with. As we explained in our previous blog, it is not always easy to correctly determine the origin of a good. Such was the case in a ruling by the Amsterdam Court of Appeal regarding bicycles assembled in Cambodia but consisting mainly of Chinese parts. Upon importation, the bicycles were declared to have Cambodian origin - preferential origin - which meant that a preferential tariff was applicable. However, the Court of Appeal disagreed. In short, it applied the so-called residual rule, which means that the origin depends on where most of the parts of the final assembly come from. In this case, this was China - being of non-preferential origin - which entailed anti-dumping duties.
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