Global Fastener News

2010 FIN – China Transshipping Fasteners to EU Via Malaysia

April 15
00:00 2013

March 17, 2010 FIN – Since the European Union imposed 87% antidumping duties on Chinese fasteners starting in February 2009, Malaysia’s monthly fasteners exports to the EU have quadrupled, the Malaysian Star reports.

Some Malaysian companies reportedly are providing repacking services for Chinese fasteners and shipping them with their generalized system of preferences (GSP) and made-in-Malaysia certificate of origin documents, allowing them to enter Europe with respective duties of 1.2% and 3.7%.
Fastener exports from Malaysia nearly doubled to 99,000 tons in 2009, based on information from the Ministry of International Trade and Industry (Miti).
“In the country presently, there are only six major steel fastener producers, of which four specializes in manufacturing mild-steel fasteners, producing collectively 4,000 tons to 5,000 tons of fasteners monthly,” stated Richard Yeap Soon Thong, senior manager of Chin Well Holdings Bhd.
Yeap said repackaging firms are profiting about 7% of the invoice for each shipment of container – about US$20,000.
Malaysian officials are reportedly working with the EU Anti-Fraud Office (OLAF), the port authorities and customs to investigate the matter.
“Some firms also use false documents to obtain certificate of origin, which declares that the goods are of Malaysian origin,” said European Anti-Fraud Office (OLAF) customs unit head David Murphy. “OLAF is working closely with Miti to tackle the problem that also exists at other major trans-shipment hubs such as the Jebel Ali free zone in Dubai and Singapore.”
Murphy said millions of euros worth of Chinese goods are being passed off as Malaysian-made by using the Port Klang Free Zone trans-shipment hub, where imported Chinese goods were transferred to another container and re-exported using the invoice of a Malaysian company.
In response, Malaysia’s trade ministry said it has initiated stronger scrutiny of fastener export, and is now requiring all exporters to provide a letter of indemnity for non-involvement in transshipments of Chinese fasteners to the EU.
Other measures include inspecting fastener manufacturers to verify both capability and capacity to produce fasteners for export.
“We are also working closely with other Malaysian authorities such as customs, port authorities, and free zone authorities to ensure there is no transhipment of fasteners from China,” the ministry said in a statement.
There is evidence that transshipping is hurting legitimate Malaysian fastener manufacturers who say cheaper China-made fasteners have cost them market share in Europe and forced them to cut prices by 20% or more at a time when they could have achieved double-digit prices increases.
Transshippers Facing Penalties?
Now that European fastener inventories have eroded and early signs of demand recovery are driving some growth in imports, the issue of circumvention is of growing concern across the European fastener industry – for both manufacturers who are seeing the antidumping measures for which they fought undermined and by the majority of law abiding distributors who face unfair competition from importers who are “breaking the rules,” Fastener + Fixing editor Phil Matten told GlobalFastenerNews.com.
“With tariffs on carbon steel fasteners at up to 85%, importers that succeed in circumventing the anti dumping regulation gain a massive competitive advantage,” Matten stated.
Matten said the EU has “a clear responsibility to take decisive action” to prevent circumvention.
“While the reports from Malaysia are encouraging the reality is companies will continue to take the risk, because the reward is so great, until they see clear evidence that importers involved in circumvention are being heavily penalized.”
XL Screw vice president Jikyoon Park expressed doubt that Malaysian companies will be penalized for circumventing EU tariffs.
“I do not expect those companies will get into trouble with Malaysian government authority because of the many loopholes and difficulty of enforcement by the government,” Park told GlobalFastenerNews.com. “I think it is more likely the importers in the EU who purchase fasteners that are transshipped (will face penalties), but it will depend on the law of each land.”
Bruce Darling of Porteous Fastener Co. said he wasn’t surprised it was occurring.
“Some makers in China will do most anything to sell their products,” Darling told GlobalFastenerNews.com. “We are careful to insure that factories we buy from are located in the country of manufacture.”

Bearing on U.S. Antidumping Efforts?
Even if Nucor won its antidumping appeal on certain fasteners from China and Taiwan, industry veterans doubt that fastener transshipping to the U.S. would become widespread.
“If I look at only ocean freight cost, I think it will be easier for Chinese fastener makers to transship to EU market than to U.S. market,” Park stated. “Malaysia is in route to EU countries, so additional ocean freight will not be as high as shipping to U.S.”
Transshipment is not likely to be prevalent if the U.S. imposes remedial duties, trade attorney Matthew McGrath told GlobalFastenerNews.com.
“The penalties are significant enough, and the replication of the production resources simple enough, that production is more likely to move to other countries.”While McGrath couldn’t comment on whether U.S. Customs enforcement is any more strict than the EU, “I can say that the potential liability is great enough that US importers would not engage in blatant trans-shipment to avoid dumping duties.” ©2010/2013 Fastener Industry News.
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

 

 

 

 

2010 FIN � GRK Wins Exemption From Canadian Anti-Dumping Duties
February 2, 2010 FIN – After a five-year battle with the Canadian government, Ontario-based GRK Fasteners won an exemption from the Canadian International Trade Tribunal for antidumping duties on Taiwan imports.
GRK manufactures more than 350 types of primarily construction screws and has 40 employees in Thunder Bay. GRK was preparing to move to another country without a change in the 170% tariffs.
In 2004 Canadian companies filed complaints that Chinese manufacturers were dumping fasteners in Canada at less than the production cost. First there was a 10% duty. Then the Canadian government added antidumping duties to fasteners from Taiwan in addition to China a 10% duty was added to GRK fasteners manufactured in Taiwan.
Last February the duty was increased to 170%.
“Essentially it priced us out of the market in Canada entirely,” company president Mirco Walther told tbnewswatch.com. “The retail price jumped from $5 to $13. So you can imagine that is impossible to comprehend for average users of our products.”
Walther estimated GRK lost seven figures in the past year due to the duties. GRK may recoup the duties from the government but has lost $400,000 in legal fees over five years. ©2010/2013 Fastener Industry News.
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

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