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Markets: Warning shot for China’s ceramic industry

(August 2011) The European Union is gearing up to use heavy artillery against the Chinese ceramic industry: in March 2011 the EU-Commission imposed a limited surcharge on imports of ceramics from China to thwart dumping prices. Depending on the manufacturer, imports of ceramic tiles to Europe are now subject to a surcharge of 26.2 – 73%. The duty is fixed for an initial period of 6 months.

Claude Gargi, editor-in-chief of the French trade journal Pierre Actual picked up on this story, which may be of interest to the stone industry as well, in the journal’s June edition.

The step was initiated by the European Ceramic Tile Manufacturers’ Federation (CET), when it presented irrefutable evidence of concerted price dumping by Chinese competitors on behalf of 69 European manufacturers, responsible for more than one third of the EU tile production.

The Commission conducted an official investigation in June 2010 and enacted the tariffs in March 2011 which are subject to a five-year extension as of September 17th 2011.

Official Chinese sources closely followed the proceedings. A statement by the Chinese embassy in Berlin e.g., warned that the measure „could drive 10 – 15 % of Chinese manufacturers (in the branch, editors‘ comment) into bankruptcy and make 100,000 employees redundant“.

After the EU-Commission made its decision official, the line of argument was modified: „It is the opinion of some of the EU’s legal experts that the duty is, in fact, a protectionist trade measure”, is said on a governmental webpage.

What is price dumping in foreign trade?

Aggressive price dumping occurs when a product is sold for less in the target country than in the country of its provenance. The World Trade Organization WTO sees this as circumstantial evidence of hidden governmental subsidies through advancement of exports or financial aid in production.

Price dumping is generally at hand e.g. if a country wishes to gain access to a market previously in another country’s unrelenting grip.

China is a member of the WTO but was often subject to accusations of unfair export methods. One aspect of dumping is trademark infringement, by means of which a producer can save on the costs of product development by copying another’s brand.

Dumping is a constant source of strife in world trade. One of the arguments often propagated by third world countries is that EU-measures to support local farmers, e.g. is intended to protect them against flooding of the market by foreign producers.

The first permanent import duty against China was imposed by the EU in May 2011 on paper products.

Detailed report on the EU-decision

Chinese television report in English

Official Chinese Statements (German 1, 2)

Anti-dumping-duty imposed on the Chinese paper industry