The European Commission is moving ahead with plans to slap anti-dumping duties on plastic bags from China and Thailand, but has backed away from putting them on Malaysian imports.
A July 6 proposal from the commission, which was not entirely unexpected, sets up what is likely to be intense lobbying ahead of a vote on the plan later this month by the European Union member states.
EC said the tariffs are necessary to protect its domestic industry and give it time to recover from what it said are dumped imports of bags. The EC proposes tariffs of 5-15 percent on imports from China and 6-14 percent from Thailand.
``Should anti-dumping measures not be imposed, it is likely that the deterioration of the already-poor situation of the community industry would continue,'' the commission said. ``It would not be able to carry out the necessary investments in order to compete effectively with the dumped imports.''
But the measure quickly was condemned by retailers, who said it would increase costs for consumers and chided the EC for ignoring what they said is the real issue: sky-high prices for oil and plastic that hurt the competitiveness of the European bag industry.
``The real issue for failing manufacturers in France and Spain is the overinflated prices they are charging for their raw materials,'' said Alisdair Gray, director of the British Retail Consortium. ``The commission should be tackling oil companies over that, not dealing another blow to free trade.''
BRC said the proposal would add 15 percent to the cost of a bag. While bags in many cases are given away, the costs would have to be passed on to consumers, BRC said.
``This will not preserve a single European job,'' Gray said, noting that the bag decision came after EC earlier in the week proposed restrictions on leather shoes from China and Vietnam.
But the European Commission said the bag industry has suffered from a flood of dumped imports since 2001, depressing prices and reducing profit to break-even levels. Imports from China and Thailand rose 40 percent, and market share of those countries jumped from 13.8 percent to 18.3 percent, the EC said.
``If ... measures are not imposed, it is likely that the community production will continue to decline and more operators will go out of business,'' EC said.
The commission said the impact on consumers would be ``negligible'' given the small costs involved. The measure would cover a range of bags, including retail bags, garbage bags and freezer bags.
A Singapore lawyer who represents Asian bag producers said producers in China and Thailand would be severely affected, given their tight margins.
``In this industry, anything above 5-6 percent duties will have a major impact,'' said Edmund Sim, a partner in the Singapore office of U.S. law firm Hunton & Williams LLP.
He said it's not clear how the member states will vote. France and Spain seem more inclined to support duties, while the United Kingdom and Scandinavian countries do not, he said.
``It's an open question; the vote could be very close,'' he said.
Sim did praise the decision to exempt Malaysia, saying it was ``unprecedented'' for the EC to give a country effectively a zero dumping rate.
A coalition of European bag makers had asked that all three countries be included in anti-dumping measures.