BMW, Peugeot push for end of EU duties on Chinese wheels

10th October 2016. By Poppy Bullock

BMW, Renault, Peugeot and other European carmakers are ramping up efforts for EU governments to end dumping duties on Chinese aluminum wheels, MLex has learned. The push comes as the European Commission investigates whether the 22.3 percent tariffs should continue for another five years.

Since 2010, the EU has imposed duties on the wheels to counter dumping, which occurs when a foreign good is sold below the cost of production or the value on its home market.

Last year, commission investigators opened a review into whether the five-year wheel levies should continue.

But European car companies say the duties aren't needed, because the market has changed since the duties were imposed. Demand for aluminum wheels has grown, they say, as companies switch from steel wheels because aluminum is lighter and more efficient. China's demand has also increased, meaning Chinese companies have less incentive to dump the wheels in Europe, the manufacturers say.

While investigators are still deciding whether the duties should be extended, carmakers are lobbying EU governments, which would have to give the all-clear for the dumping protection to continue.

Producers say that European wheelmakers aren't able to produce enough to meet the higher demand, and that the tariffs exacerbate this deficit.

The dumping levies cost EU car manufacturers 30 million euros ($33.5 million) a year, according to the industry.

Lobbying is a big part of business for companies such as BMW, which had a 2015 budget of more than 1.2 million euros for influencing the EU institutions. Carmakers' views are also represented through the European Automobile Manufacturers Association.

Automobile makers are leaning on EU capitals, in case the commission decides to continue the duties, to reject its proposal.

In almost all trade-defense cases, governments agree to the measures proposed by the commission.

On the flip side, European wheelmakers such as Borbet, Heyes Lemmerz and Ronal say they need the continued protection.

A reason to keep the dumping duties is linked to China's value-added tax system, they say. Aluminum traders must pay VAT of 17 percent, but the tax is reimbursed on certain products that are made with aluminum, such as wheels.

This keeps aluminum on the Chinese market and suppresses prices for the industry. These more cheaply made wheels are then shipped to Europe at prices with which EU producers can't compete, they say.

The existing dumping duties have prevented this from happening.

The commission has until Jan. 25 to decide whether to continue the levies.