No 1

BAFD warns on stainless tax

Duties on stainless fasteners an £8m tax burden

In November 2005 the European Commission confirmed the imposition of anti dumping duties on the majority of threaded stainless steel fasteners imported from key Asian producing countries. The duties, which range up to 27.4%, will remain in place until at least 2010, when they could be extended for a further period.

The British Association of Fastener Distributors has now estimated that, over a five-year period, the duties could represent an additional taxation burden on British industries as diverse as engineering, electronics and construction - as well as on the consumer - of £8million.

Although Stainless Steel members of the Association have reviewed sourcing strategies to limit the impact on their customers, the duties or the additional cost of purchasing more products from European manufacturing sources are likely to mean an average 15% increase in the cost of stainless steel fasteners to industry.

BAFD Chairman, Steve Auld, commented, "It is entirely unrealistic for European politicians to expect this level of cost increase to be absorbed by the fastener distribution industry. In some cases the duty exceeds the entire profit margin available to the distributor." BAFD believes that the broad brush, indiscriminate nature of antidumping measures means that duty is applied to many products types that are simply not available from any European volume producer, making the tax an outright burden, without any positive effect on European business or jobs.

Working alongside other European fastener distributor associations, BAFD members argued strongly against the imposition of these taxes, but were only successful in having nuts eliminated from the measures, on the basis no volume European manufacturer existed at all.

BAFD is now deeply concerned that similar measures may be targeted against the import of carbon steel threaded fasteners. "If this happens," says Steve Auld, "the impact on British industry and consumers will be many times wider ranging and deeper biting."

Provisional Stainless Steel Antidumping Duties Applied

With just one day to go to the nine month investigation deadline, the European Commission has published provisional anti dumping duty tariffs on stainless steel fasteners from five Asian countries. The decision is dated 20 May, published in the EU official journal on 21 May. Publication has to be simultaneous in the 19 different languages of the European Union.

The duties effectively cover all types of threaded stainless steel fasteners with the exception of nuts. The specified CN codes are 7318 1210, 1410, 1530, 1551, 1561, 1570.

CN Code 73181630 - covering nuts - has been excluded from the provisional anti dumping duties, on the basis the EC has for the present accepted the argument made by importers and distributors that stainless nuts are not being manufactured in volume in Europe. This is still subject to further investigation and confirmation as part of the final definitive stage, which may take a further six months. Since the Philippines are only recorded as supplying nuts, this country has also, provisionally, been excluded from the ADDs. if the nuts ruling is confirmed at the definitive stage, the Philippines would be removed from the investigation.

Distributor associations had also argued that only CN codes 7318 1561 (socket screws) and 1570 (Hex bolts) should be included, since these products were the only ones manufactured in volume in the European Union. However the EC rejected the argument and retained the much wider definition of the 'product' under investigation.

Provisional duties will be applied for a 6 month period on the following basis:

PR China: 27.4%   (except two specified producers at 11.4% and 12.2% respectively)

Indonesia: 24.6% (except one specified producer at 9.8%)

Taiwan:    23.6%   (except 32 specified producers at 15.9% and a further five at rates ranging between 8.8% and 16.1%)

Thailand: 15.9%    (except three specified producers at rates ranging between 11.0% and 14.6%)

Vietnam: 7.7%

No grounds for dumping were found in relation to Malaysia, so provisional tariffs have not been applied. Korea and India were not named in the original complaint or investigation.

The duty on Chinese product is significantly lower than previous ADD measures, when it was over 70%. This appears to be due to the EC accepting that India, as specified by the complainant manufacturers, was not an appropriate country of reference (analogue country). The Commission instead selected Taiwan, on the basis that it had an extensive and competitive domestic market for comparative purposes.

The Commission's actions were generally anticipated by manufacturers and distributors in Europe, but the late announcement has already been criticised as providing importers no time to adjust their sourcing policies. There have also been comments that the regulations appear to substantially favour European steel companies, who are involved in the ownership of several stainless steel fastener producers. It was also noted that the decision that consumers of stainless steel fasteners were unlikely to be adversely affected had been based on a single response from a rolling stock manufacturer. which estimated that stainless fasteners accounted for less than 1% of the total cost of finished product.