The European Commission launches investigation to recalculate duties

A few months ago, a piece of news shook the entire European tire industry, taking everyone by surprise: the EU General Court made public on May 4 its judgment invalidating EU Regulation 2018/1579 (anti-dumping duties on Chinese commercial tires) and EU Regulation 2018/1690 (anti-subsidy duties on Chinese commercial tires), upholding the grounds of the appeal filed against the aforementioned measures in 2019 by representatives of the Chinese rubber industry and the Chinese Chamber of Commerce. The grounds for the ruling are mainly twofold: on the one hand, the method used by the Commission to calculate the difference between the price of Chinese tires in Europe and those produced by the European industry was deemed unlawful. On the other, failure to respect the rights of defence of Chinese producers, who were denied access to certain information, including the exact method used to determine the level of alleged dumping.

Under current rules, the European Commission had the opportunity to appeal within seventy days of the date of publication of the ruling, i.e., by July 14. A riot of speculations circulated within the industry during those seventy days: many stakeholders hoped for the filing of an appeal, which would keep the duties in place for the entire duration of the proceedings (likely at least two years); while many feared the simple acceptance of the ruling without further action by the Commission, i.e., termination of the duties as of July 15. Instead, the answer to these doubts came on July 8, when the European Commission published the news it would reopen anti-dumping and anti-subsidy investigations concerning the regulations invalidated by the May 4 ruling.

This means that the Commission did not see fit to appeal the ruling, but at the same time intends to adjust the calculation errors undermining the duties introduced in 2018 and then return to applying anti-dumping measures based on new parameters. In fact, the purpose of these new investigations is to recalculate the magnitude of the duties to be applied for the products covered by the two regulations, namely tires, both new and retreaded, made of rubber, of the type used for buses or trucks, with a load index higher than 121 originating in the People's Republic of China. During the investigation, all duties previously applied to Chinese producers named in the regulations will be suspended until the investigation is concluded and the new procedures are established. In addition, in order to implement the judgments, the EU Commission published Regulation 2022/1175 of July 7, which subjects imports of the above tires from the People's Republic of China to registration. Registration of imports by the customs authorities will be used to retroactively collect the new duties for Chinese imports until the recalculation is completed. In addition, in line with its current practice, the Commission has instructed national customs authorities to refrain from refunding duties already collected before the conclusions of the investigation. The import registration activity is currently limited to a period of 9 months, which means that the Commission expects to conclude the investigation before the expiration of this period.

We interviewed Stefano Carloni, president of AIRP, an association that has been at the forefront of advocating the introduction of duties to defend the European retreading industry from the invasion of low-cost Chinese products. "There is no denying that ruling to annul the antidumping regulations came as an unpleasant surprise and is causing great concerns," Carloni says. "However, the fact that investigation will be reopened and the establishment of import registrations, can be considered reassuring signs. Indeed, what is leaking out is the political will to reinstate duties on Chinese tires in order to continue defending the European market from a dumping phenomenon whose existence was actually not questioned by the ruling, just as the existence of trade damage caused to the European industry was never called into questioned. It should be emphasized that the annulment of the regulations involves only the method used to calculate the amount of duties, but not the reasons behind the duties themselves, and the fact that import registrations have been reopened (as they were in early 2018 in view of future anti-dumping measures) tells us that the Commission is determined to reinstate them as soon as possible. "Moreover, it would be important to preside over the issue of duties in order to consider the possibility of extending them in the future to other types of tires and other countries of origin, given the prices we are observing on certain earthmoving tires, or on many products imported from Southeast Asia," Carloni concludes.