MANAGEMENT + SYSTEMS


and recognise how the ‘law of unintended consequences’ has manifested itself. “For more than a decade anti-dumping tariffs have been applied on stainless steel fasteners from P.R. China and Taiwan, as well as at various times on imports from other Asian countries. Anti-dumping tariffs were reconfirmed on China and Taiwan early in 2013, following an EU expiry review. “The existence and continuation of those tariffs since 2005


had created two fundamental changes in the market. In the short term, one was as intended, strengthening to some extent the opportunity for European stainless steel manufacturers to produce and supply standard fastener ranges to the European distribution market. The other and ultimately the most pervasive, however, was to catalyse major investment in stainless steel fastener production elsewhere in Asia, most significantly and more or less for the first time in India. “The rapid development of large scale capacity at one


company, owned by a massive Indian stainless steel group, resulted in the availability of stainless steel fasteners at lower costs than any other source could offer, certainly in China and Taiwan once anti-dumping duties were factored in - creating a completely dominant supplier. “The very largest stainless steel importers in Europe,


possessed of massive purchasing power, were able to use this new manufacturing base to if not initiate certainly accelerate their dominance in the EU supply of standard stainless steel fasteners. The cost basis allowed them to adopt market pricing that competed head on with European manufactured prices, with the crucial additional advantage of immediate stock availability. There is no criticism of these companies: they legitimately seized on a commercial opportunity presented by the after effects of the trade measure policies, but the market effects are a source of concern.


“ Is it not time to tread more carefully and to recognise that the genie of market intervention can never be put back into the bottle - and that once released it can wreak untold havoc?”


“EU producers were horrified by this new scenario and


passionately argued for action on the part of the European Commission. Complaints alleging both dumping and subsidies


106 Fastener + Fixing Magazine • Issue 81 May 2013


resulted in EU investigations of Indian exporters. Evidence of subsidisation and dumping was found but not, critically, on the part of the dominant high volume exporter. As a result the investigations were terminated and no duties applied to imports from India - effectively sealing the fate of EU producers in relation to the supply of standard stainless steel fasteners. “Soon after, the Commission triggered, at its own initiative,


circumvention investigations on Thailand, Malaysia and the Philippines, creating another extended period of uncertainty for importers and for EU manufacturers, neither of which could gauge or anticipate the structure of the supply market. For a while, EU manufacturers were upbeat that duties would be applied to all three countries but in the end the investigation concluded that evidence of significant circumvention only existed in relation to the Philippines. This really was a predictable outcome. The Commission had previously investigated these countries in relation to stainless steel fasteners and the existence of mature, significant volume manufacturers in Malaysia and Thailand must have been known. “Nevertheless it took the EFDA and the major importers to


present compelling evidence to the Commission that the main volume producers in Thailand and Malaysia were legitimate and known to be for many years. “The circumvention cases concluded in March 2013 but


from the beginning of the year it was apparent that a radical transformation was occurring in the European stainless fastener manufacturing sector. Now it is very clear that a significant proportion of volume EU producers have abandoned or substantially reduced their interest in making standard stainless steel fasteners. Some have actively downsized including reducing employment levels, and several have made it clear they are now concentrating on automotive and other special application and specification fasteners. “That leaves one dominant Indian producer and a small number of large scale stainless steel importer/wholesalers to exercise a dominant influence over the European distribution market. In time, as with all markets, there will be some level of correction but for the foreseeable future the EU’s trade defence actions on stainless steel fasteners have delivered precisely the opposite result to that intended. EU stainless steel fastener manufacturing has been undermined, output will reduce, and employment will fall. In the meantime a large number of importers have been penalised with duties that they could not reasonably have avoided (that is legitimately avoided not illegally evaded). It is hard to see the winners, although it would be very interesting to know exactly what level of duty income has flowed to the EU central budget as a result of the last five years of trade measure activity – not that this is ever an appropriate measure of trade policy success. “As for the future, there appears little prospect of change.


The European Commission is finalising its proposals for modernisation of its trade defence instruments but there is little evidence that much has been learnt from the fastener experience and every indication that the same mistakes will be perpetuated in the future.


“Is it not time to tread more carefully and to recognise that the genie of market intervention can never be put back into the bottle - and that once released it can wreak untold havoc? Certainly there is a strong case that the EU should take more account of outcomes in its judgement, and not be so constrained by strict adherence to due process – a tall order perhaps?”


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