For Over 33 Years

Tungsten electrodes from Asia - subsequent payments threaten for European companies

In an implementing regulation at the end of 2019, the European Commission ordered the customs registration of tungsten electrodes with the country of origin PRC, which are shipped to the EU from India, Laos and Thailand.

Where the customs investigation reveals the circumvention of previously imposed anti-dumping duties, anti-dumping or countervailing duties may be levied retroactively. In addition, all companies are also threatened with criminal proceedings if they purchase tungsten electrodes from India, Laos or Thailand. The first criminal investigations are already underway, as we had reported.

However, by submitting a statement to the European Commission at an early stage, it is possible, under certain conditions, to obtain exemption from customs registration and thus avoid subsequent customs payments.

Affected are tungsten electrodes from India, Laos, Thailand and China

The product concerned is tungsten welding electrodes, including rods and bars for welding electrodes, containing 94 % or more by weight of tungsten. Sintered tungsten electrodes, even cut to size, are not affected. The product is currently marketed under the Customs tariff numbers ex 8101 99 10 and ex 8515 90 80.

The investigation concerns imports of tungsten electrodes originating in the PRC consigned from India, Laos and Thailand. It is irrelevant whether the product is declared as originating in India, Laos and Thailand or not.

The product under review is mainly used in welding and similar processes, such as tungsten inert gas (TIG) welding, plasma welding and plasma arc cutting. The industries concerned may therefore include construction, shipbuilding, the automotive industry, but also marine engineering, chemical process engineering, nuclear technology, aerospace and oil and gas pipelines.

Why was an anti-dumping proceeding initiated?

The registration was preceded by a number of Commission implementing Regulations, including the implementing Regulation No 1350/2006 of 13 September 2006 imposing a provisional anti-dumping duty on imports of certain tungsten electrodes originating in the PRC.

The measure was based on a complaint lodged by the European Metals Industry Federation (Eurométaux) on behalf of a Union producer representing more than 50 % of the production of certain tungsten electrodes in the Union.

The request was based on the grounds that imports of tungsten electrodes from the PRC would cause a substantial loss in sales volume and market share, with consequent negative impact on the profitability of the Union industry.

The resulting price depression and loss of economies of scale due to low capacity utilisation has also, in the Commission’s view, been shown to lead to unsustainable levels of negative profitability and consequently to substantial financial losses of the Community industry.

Verification visits were carried out by the European Commission at the premises of, inter alia, the Chinese company Shaanxi Yuheng Tungsten & Molybdenum Industrial Co, Ltd, Baoji, Shaanxi, PRC, which exports the said tungsten electrodes to the Union.

Outlook: European commission predicts continued dumping of tungsten electrodes from Asia

Due to the limited production capacity of tungsten electrodes (currently only in China and the Union, according to the European Union), the PRC is relying on export restrictions for the main raw material, which is found in large quantities only locally in the PRC.

The Commission therefore considers that there is a strong likelihood of continuation of dumping in respect of tungsten electrodes, as allegedly confirmed in particular by the investigation concerning the Chinese company Shaanxi Yuheng Tungsten & Molybdenum Industrial Co, Ltd, Baoji, Shaanxi, PRC. This was mainly due to the attractiveness of the Union market and the high spare capacity installed in the PRC and the evidence of continued significant dumping of the product concerned.

Procedure for customs registration

Registration of the product allows the Commission to apply an anti-dumping duty retroactively. If the investigation shows that anti-dumping duties are being circumvented, there is a risk of substantial back payments and financial losses for the companies concerned.

The amount of the subsequent payments will depend on the date of customs registration. As the customs investigation procedure for the product or group of products concerned can take up to nine months, early legal assistance and advice can avoid significant financial damage.

Customs registration – Companies should react early

In order to safeguard their interests and procedural rights, companies are therefore advised to contact the European Commission at an early stage when an exemption from registration is sought.

Exemption from registration may be possible, inter alia, where companies act only as intermediaries or use the product or group of products concerned in small quantities, for example for repairs. Should the assembly operations involving the product concerned not constitute circumvention of anti-dumping measures, exemption may also be considered.

Companies sourcing tungsten electrodes from the PRC consigned from India, Laos and Thailand should now assess whether their imports are subject to registration in order to avoid registration and other imminent antidumping measures imposed by the Commission.

Evasion of anti-dumping duties is a criminal offence

In any event, should there already be a legitimate request for a subsequent payment of anti-dumping duties on tungsten electrodes, this undertaking must be respected. For example, illegal circumvention or evasion of anti-dumping duties by declaring the wrong tariff headings regularly constitutes a criminal offence. The consequence is then a criminal investigation by the customs investigation office, often against the parties involved and the management.

We will check for you if you are affected by back payments on tungsten electrodes and how you can proceed.

For companies: 15 minutes free initial consultation+49 40 369615-0or send an e-mail
Attorney Dr. Tristan Wegner

Ihr Ansprechpartner

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