… and this is not another Lance Armstrong exposé. It is about the ability of someone other than the United States to use trade policy to shoot itself in the foot (or fall off the bike, as it were). This is the 2-decades long story of the European Union’s campaign to keep Chinese-made bicycles off European roads. Despite the fact that European governments are doing their utmost to convince their citizens to ride bicycles to cut pollution and congestion. It’s a case of trade versus environment.
In the early 1990s alert European bike-makers realized that China was assaulting world markets with impossibly inexpensive bicycles. They pressed Brussels to put anti-dumping duties in place and the Eurocrats dutifully found evidence that China was, indeed, selling bicycles in Europe at less than cost. The EU probably got it right, because Chinese penetration in open markets approached monopoly levels.
Imported bicycles from China now dominated the U.S. and Japanese markets. In 2011, 99% of bicycles sold in the U.S. were imported from China. Japan’s bicycle market has followed a similar trend. During 2010, 90% of bicycles sold were imported, 97% of which were shipped from China.
~ Asia Trade Watch
The European bicycle industry mostly puts out a high-end product, which the Chinese mostly do not. But the Europeans, or at least the 20,000 or so in the bicycle industry, are terrified that the cheap Chinese bikes will cause Europeans to forego the expensive models. Interestingly, their beef is only about completed bicycles, so one suspects that Chinese parts can be found in some of those high-end bikes from Italy and Germany.The European peloton is accelerating to catch the Chinese breakaway. The European Bicycle Manufacturers Association (EBMA) has launched a 2-pronged attack. Last April, they convinced the EU to begin an investigation into alleged Chinese circumvention of the old anti-dumping duties by shipping and relabeling Chinese bikes through other countries, namely Malaysia, Sri Lanka, Indonesia and Tunisia. Then, in November 2012, a countervailing duty investigation was launched that alleges that the Chinese bicycles are subsidized by Beijing.
Beijing, of course, denies all this, insisting that their pristine, innocent bike manufacturers don’t receive subsidies, don’t sell at less than fair value, and don’t circumvent the EU’s duties by riding their bikes through other countries. Looked at purely as a trade issue, I don’t think that Beijing will win this fight anytime soon. Beijing also says its manufacturers only sold about 400,000 bikes in Europe in 2011, but EBMA counters that running their bikes through other countries raises the toal to more like 1.5 million units. Either number is far smaller market penetration than either the United States or Japan have seen.
The curious thing is that Beijing may not have to win this race on its own. Brussels’ determination to help the European bicycle industry runs headlong into Europe’s desire to become ever greener. At some point, Europe’s green parties and others are going to notice that stopping cheap bicycle imports runs counter to attempts to reduce automobile emissions, cut crowding in city traffic, ease city parking, and even against new campaigns to cut obesity. The European consumer will also wake up to the fact that they pay higher prices for their bicycles than consumers do elsewhere.
Unsurprisingly, the average price of a bicycle in Europe was significantly higher in comparison to the U.S. in 2011; the EU consumer paid on average USD 343 for a new bicycle, while the U.S. consumer paid roughly USD 221.
~ Asia Trade Watch
China’s legal challenges may not succeed, but the European bike manufacturers will have tough going against a consortium of European consumers, greens, city planners and health specialists.