Chinese fasteners again subject to definitive anti-dumping duties

By Implementing Regulation (EU) 2022/191 of 16 February 2022[1], the European Commission has imposed a definitive anti-dumping duty on certain iron and steel fasteners originating in the People's Republic of China. Imports into the EU of Chinese bolts and screws have previously been subject to a significant percentage of anti-dumping duty for many years. The previous measures caused controversy at the time; indeed, the EU was reprimanded no less than twice in WTO context. As of February 18, 2022, a definitive anti-dumping duty is again in force. The anti-dumping duty rate is as high as 86.5%.

Importers of iron and steel fasteners will have to be very careful not to become a victim of origin fraud, especially if they buy these products in third countries neighboring China. Attention is also required for customs agents and logistics service providers who act as intermediaries in issuing customs clearance orders. Imports subject to registration during the anti-dumping investigation period will not be subject to anti-dumping duty with retroactive effect. Jikke Biermasz discusses the new anti-dumping measure in this article.

Implementing Regulation (EU) 2022/191

By Implementing Regulation (EU) 2022/191 of 16 February 2022, the European Commission decided to subject imports into the EU of certain iron and steel fasteners originating in China to a definitive anti-dumping duty of 86.5% of the net, free-at-EU-frontier price, before duty. This rate applies to all other companies (Taric additional code C999). Products manufactured by three named Chinese companies are subject to different definitive anti-dumping duty rates. These individual duty rates, ranging from 22.1% to 48.8%, shall only be applied upon presentation of a valid commercial invoice to the customs authorities of the importing Member State, which shall conform to the requirements set out therein. Other Chinese producers who cooperated with the investigation and are listed in the Annex to Regulation (EU) 2022/191 are subject to an anti-dumping duty rate of 39.6%.   

It concerns certain fasteners of iron or steel, other than of stainless steel, i.e. wood screws, self-tapping screws, other screws and bolts with heads and washers originating in China. The corresponding commodity codes are listed in Article 1(1) of Regulation (EU) 2022/191. They are subheadings of tariff heading 7318. The anti-dumping measure was published on February 17, 2022 and entered into force the day after publication, on February 18, 2022.

Investigation following complaint by the European Industrial Fasteners Institute

The anti-dumping measure was imposed following an investigation initiated pursuant to Article 5 of the Basic Anti-Dumping Regulation[2] on December 21, 2020, based on a complaint lodged by the European Industrial Fasteners Institute (EIFI) on behalf of producers representing more than 25% of total EU production. The evidence presented in the complaint, in respect of dumping and resulting injury to the EU industry, was considered sufficient to justify the initiation of an investigation.

The European Commission then examined whether the cumulative conditions of the Basic Anti-Dumping Regulation for the imposition of an anti-dumping measure were met. This required a finding of dumping, injury to the EU industry and a causal link between the dumping and the injury. The European Commission made this determination.

The European Commission then assessed whether, despite the finding of injurious dumping, the imposition of an anti-dumping measure on imports of Chinese fasteners would not be against the interests of the EU as a whole. In doing so, all interests concerned were considered, including those of the EU industry, importers, retailers and users of the product concerned. The European Commission concluded that there were no compelling reasons to believe that the imposition of the measure would not be in the interest of the EU.     

Registration terminated without collection of retroactive anti-dumping duty on registered imports

Following the request of the complainant EIFI, the European Commission temporarily subjected imports of fasteners originating in China to registration under Article 14(5) of the Basic Anti-Dumping Regulation during the dumping investigation. This was done in view of the possible retroactive application of anti-dumping duties. The registration was imposed by Implementing Regulation (EU) 2021/970.

Article 10(4) of the Basic Anti-Dumping Regulation provides that anti-dumping duty may only be levied retroactively on products which were entered for consumption not more than 90 days prior to the date of entry into force of provisional measures. However, no provisional measures were imposed in this case. Although EIFI still disputed that the imposition of provisional duties would be a condition for the retroactive imposition of anti-dumping duty on the registered imports, the European Commission took the position that it was. Since a legal condition for the retroactive collection of duties on the registered imports was not met, the European Commission decided to terminate the registration. Thus, no anti-dumping duty will be levied retroactively on the registered imports (Article 3 Regulation (EU) 2022/191).  

Acceptance of price undertaking impracticable; offer rejected

Six Chinese exporting producers submitted price undertaking offers following the European Commission's disclosure of the definitive findings. The legal basis for such a price undertaking is Article 8 of the Basic Anti-Dumping Regulation. The minimum price offered must be at a level high enough to eliminate the injurious effects of dumping. Also, its acceptance must be enforceable.

The European Commission rejected the offer of a price undertaking in this case. For several reasons, the European Commission found the acceptance not to be enforceable. Among other things, the number of exporting producers was too large to make a price undertaking and its necessary monitoring workable. Also, the product concerned is too variable in nature, with over 100 product control numbers and classified into different tariff headings and subheadings. The European Commission further noted the risk of "cross-compensation" among the different product types, which was also related to the fact that some companies had affiliated companies in the EU. All in all, the European Commission concluded that the price undertakings offered would not be easily monitorable, and therefore not enforceable, and thus rejected them.

Imports into the EU of fasteners again subject to definitive anti-dumping duty

Thus, as of February 18, 2022, imports of certain iron and steel screws and bolts from China are again subject to a definitive anti-dumping duty. As indicated, the rate is significant. For "all other companies," it is 86.5% on the net price, free-at-Union-frontier before customs clearance. The products made by the Chinese exporting producers on the list in the Annex to Regulation (EU) 2022/191 respectively the three Chinese companies mentioned in Article 1(2) are subject to a lower percentage or individual duties, but these are still substantial and the lower percentages only apply if strict (invoice) conditions are met.

Chinese fasteners have been subject to anti-dumping duties in the recent past[3]. The measures imposed at the time caused a great deal of controversy. The EU has been warned no less than twice in a WTO context[4]. The first time, the measure was amended[5]; the second time, the anti-dumping measure was repealed in its entirety[6]. Nevertheless, this did not affect the amount of anti-dumping duty that was paid or was still payable on the basis of the measures at issue.

Awareness and alertness required

The European Anti-Fraud Office (OLAF) conducted an investigation into compliance with the anti-dumping measures previously imposed on Chinese fasteners.  OLAF concluded that fasteners declared for free circulation in the EU originated in third countries other than China, when in fact they were Chinese products. By declaring the fasteners as originating in another third country, the anti-dumping duty would have been evaded when imported into the EU. As a result of the OLAF investigation, the customs authorities of the EU Member States have imposed post-clearance customs claims. It is not inconceivable that origin frauds will occur, and circumvention attempts will be made, also under the new measure. Of course, it is important to ensure that you do not become the victim of this.

Customs agents

Customs agents and forwarders who submit import declarations to customs on behalf of their clients are well advised to familiarize themselves with the new measure and, in particular, to critically examine the origin and commodity code stated by their clients. The imposition of a high rate of anti-dumping duty on a particular product from a particular third country entails a risk of frauds and other irregularities. After all, it will make a considerable financial difference on import whether the origin declared in the import declaration is the country against which the measure is imposed or another third country.

It also sometimes happens that importers propose to use a commodity code that falls (just) outside the scope of an anti-dumping measure. If it later turns out that the classification is incorrect, an additional assessment may be imposed. In general, it is important for customs agents to be well informed about anti-dumping measures. This makes it easier to assess risks, make choices and take measures to avoid and limit risks. The motto is of course to submit declarations on the basis of direct representation only, and possibly to require security from customers for the duration of the verification phase as a condition for making available to the customer the use of the customs agent’s   deferment account for the payment of duties and the related comprehensive guarantee.     

Logistics service providers

Also logistics service providers who act as intermediaries in the outsourcing of customs clearance assignments should be alert; for them, the risk of civil recourse is impending if the customs agent were to be confronted with a claim from the customs authorities.

Importers

Finally, importers who purchase fasteners in third countries, and specifically in South East Asian countries, must also be very careful. What delivery term do they agree with their supplier? Is that delivery condition including or excluding import duties? As a rule, the importer in the EU will must lodge the customs import declaration. The supplier from the third country cannot do that because he will probably not meet the requirement that the declarant (i.e. the person on whose name the declaration is made) must be established in the EU customs territory. Thus, the risk of a customs claim for anti-dumping duty vis-à-vis the customs authorities generally lies with the importer. How does an importer avoid bearing the brunt of an additional customs claim? How do you check whether an invoice declaration is correct? What have supplier and buyer agreed in respect of the origin of the fasteners to be purchased? Should the seller provide a warranty in the commercial contract, and what investigation obligations rest with the buyer? In practice, importers often tend to rely on certificates of origin. However, such certificates do not always guarantee that the products listed on it actually originate in the country in which they were issued, let alone that certificates of origin do not constitute hard evidence in respect of non-preferential origin. It is therefore important not to blindly trust on certificates of origin.     

About Ploum's Customs, Trade & Logistics team

The specialists of Ploum's Customs, Trade & Logistics team will be pleased to help you if you have any questions about the new anti-dumping measure on Chinese fasteners and the consequences for contracts and imports into the EU. We advise very regularly on anti-dumping, anti-subsidy and safeguard measures. In addition, in the past years we have assisted various importers, customs agents and logistics service providers in appeal proceedings against customs claims on account of customs, anti-dumping and/or countervailing duties and civil recourse proceedings following such claims. Different products passed in review: low-energy light bulbs, solar panels, fasteners, bicycles, e-bikes and biodiesel. Due to our many years of experience in the customs practice we can support you quickly and effectively. You may contact Jikke Biermasz, Marijn van Tuijl or Arjan Wolkers.