Trade War Between China and EU from Coated Paper to Potato Starch

This article was offered to us for publication on PotatoPro by CCM International Ltd, a Chinese market research company focusing on China, Asia-Pacific Rim and the global market. CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information and Import /Export Analysis.

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On 14 May 2011, the EU decided to levy anti-subsidy tax at 4% ~12% and anti-dumping tax at 8%~ 35.1% on coated paper imported from China, which was the first case of anti-dumping and anti-subsidy duty to China from EU.

The EU presented anti-dumping and anti-subsidy duty at the same time to break the tradition of inapplicability for using anti-subsidy duty in "non-market economy". It means the EU has political volte-face in trading remedy regulations to China. Anti-subsidy tax seems to become a new disaster area of trade war between EU and China.

At present, the trade friction between China and the EU is rapidly increased. To follow the EU's policy of "double anti"to China's coated paper on 14 May 2011, Chinese Ministry of Commerce announced the initial award result of surveying the anti-subsidy tax of importing EU's products.

On 16 May, 2011, Chinese Ministry of Commerce released the 19th announcement. China preliminarily awarded the subsidy of potato starch imported from EU. China's domestic industry has been virtually damaged, and there is causality between subsidy and virtual damage. From 19 May 2011, the importers have to pay deposit of temporary anti-subsidy tax according to the awarded Ad Valorem subside rate when they import potato starch from EU.

This is China's first anti-subside survey to EU's products. According to the announcement, the Ad Valorem subside rate of Roquette in France is 7.7%, Ad Valorem subside rate of AVEBE in Netherlands and AVEBE starch factory in Germany is 11.19%, which is the same as other enterprises in EU. Besides, Chinese Ministry of Commerce has been levied anti-dumping tax from 12.6% to 56.7% on potato starch originated inEU from 19 April, 2011.

In 2010, China imported 141,145 tonnes potato starch from EU.

In Q1 2011, China imported 11,780 tonnes potato starch from EU. In the coming 7 months, how will this trade war to influence the importation of potato starch in China?

According to the insight of CCM's researcher, the anti-dumping duty this time will havesome impact on potato starch import in China in a short period, China's importer will reduce a part of potato starch imported from EU due to the rising price and losing profit,but in the long term, the demand of potato starch is still large. The EU might boost their exportation by keeping rising the export subsidy of agricultural products. As a result, CCM international considers that China's import of potato starch from EU will still keep on a volume of 2,000~3,000 tonnes per month in the coming 7 months.
 

Import volume of potato starch in 2010, Unit: Kg
(Source: CCM International)

Import amount of potato starch in 2010, Unit: USD
(Source: CCM International)

Import volume of potato starch in 1st quarter, 2011, Unit: Kg
(Source: CCM International)

Import amount of potato starch in 1st quarter, 2011, Unit: USD
(Source: CCM International)