3 Dec, 2008 - The European Union has imposed a five-year anti-dumping tariff on Chinese exports of citric acid in a bid to protect regional producers such as DSM and Jungbunzlauer.
The decision will see duties as high as 42.7% slapped on citric acid shipped into the EU from China as a penalty for selling the product at below cost price – a practice known as dumping.
The major beneficiaries from the decision are likely to be Swiss company Jungbunzlauer and DSM of Belgium who are the two major European producers of citric acid - a widely used preservative and flavouring in food and drinks.
The EU decision this week to impose tariffs up to 2013 was made because the two European companies had suffered “material injury” resulting from Chinese imports. It followed a provisional determination made earlier in the year and will take effect this month.
The move comes after Chinese producers boosted their share of the EU citric acid market from 39% in 2004 to 46% in June 2007. Israel, the other main source of citric acid imported into the EU, saw its market share drop from 5% to 3% over the same period.
Fears that the tariff would lead to citric acid shortages have been dismissed by the EU. Chinese imports have remained “substantial’ following the introduction of the provisional measure in June 2008 and European producers have already announced plans to boost citric acid production, said the EC in delivering its verdict. DSM said in August it was closing its plant in China to focus on its Belgian site and Jungbunzlauer announced a month earlier proposals to lift output at its site in Austria.
The EU’s provisional levies were as high as 49.3% in some cases but importers charged more than the long-term duty will be refunded the difference. Six Chinese citric acid producers will further be exempted from the measures as they submitted minimum price pledges seen as acceptable by the EC.
Under EU regulations, anti-dumping regulations can be imposed on a six-month basis. This time period can then be extended by the member states into definitive five-year duties at either the same of different rates.