(2004/C 78 E/0858)

WRITTEN QUESTION E-3398/03

by Stefano Zappalà (PPE-DE) to the Commission

(17 November 2003)

Subject:   Dumping by China on the world copper market

China has introduced protectionist arrangements for subsidising its copper industry, allowing it to operate on the world markets in such a way as to obtain undue and unfair advantages.

In particular, firms importing secondary raw materials (scrap) are directly reimbursed 30 % of VAT, while the remaining 70 % goes to a state company grouping the five main enterprises in the sector.

This unfair advantage is being used to create a monopoly on the main world markets in raw materials, at prices which are so high that other potential buyers cannot pay them.

In just four years, from 1998 to 2002, exports of copper scrap and alloy from the EU to China rose from 70 000 to 246 000 tonnes per annum.

The EU, which lacks copper ore of its own, is losing its copper scrap and alloy — the only resource available to it — thus ensuring that its manufacturing industry will suffer a dramatic decline in competitiveness leading to a reduction in activity and job losses.

These distortions are affecting the refining industry, which produces raw materials similar to those which we otherwise have to import, and, even more so, the sector producing semi-finished products, which relies, for over 50 % of its requirements, on the availability and accessibility in cost terms of scrap originating in the EU.

It is disappointing that the Commission, which has for a long time now been made aware of these circumstances by the professional associations and, more recently, also by Europa Metalli, has still not responded and has taken no steps to re-establish fair market conditions.

Can the Commission state what urgent action it will take against China's protectionist measures on the copper market, and, in particular, what measures it intends to take to secure an end to China's direct and indirect subsidies to its industry, and in particular the reimbursement of VAT?

Answer given by Mr Lamy on behalf of the Commission

(15 December 2003)

The Commission is fully informed concerning the problems facing the European copper-processing industry with regard to supplies of secondary raw materials (i.e. scrap metal). The industry has been doubly hit by (i) the increasing scarcity of the products on the international markets, due primarily to the export restrictions imposed by Russia and certain other newly independent states and (ii) the considerable pressure on prices for those products as a result of strong demand from a number of Asian countries, particularly China.

To promote the development of its copper industry, China introduced in 2000 a scheme whereby part of the VAT paid on imports of scrap copper is refunded. The scheme was extended, with some alterations, in 2003. The European industry feels that this advantage enables Chinese operators to finance an aggressive policy of buying up a large share of the scrap for sale on international markets.

The Commission has taken account of the Community industry's concerns and has in recent months raised the issue with the Chinese authorities on a number of occasions in both bilateral and multilateral talks. It has asked for detailed information on VAT refunds through the World Trade Organisation's Transitional Review Mechanism' on China's trade policy. The Commission will use this information to assess whether the system is compatible with China's international obligations.

However, the Commission has not, as yet, noted a significant increase in imports of corresponding processed goods from China. Furthermore, the European industry has not submitted any anti-dumping or anti-subsidy complaint to the Commission, which cannot initiate the corresponding procedures itself, except in very exceptional cases.

The Commission, remaining in close contact with the Community industry, is monitoring this matter closely with a view to restoring normal competitive conditions.