European protectionism steps up a gear
The efforts of European bicycle manufacturers to lobby for tariffs to be levied on their international rivals will dampen competition and hurt consumers, writes Bill Wirtz.
Last week, the European Bicycle Manufacturers Association (EBMA) filed an anti-dumping complaint to the European Commission, demanding immediate action against mass low-cost Chinese productions of e-bikes. According to these manufacturers, Chinese e-bikes are heavily subsidised and dumped on the European market at discounted prices. According to the association, China is "heavily subsidising" and "illegally dumping" large numbers of e-bikes on the European market. The EBMA has submitted an officials complaint with the European Commission, calling for urgent anti-dumping measures on e-bikes from China.
The EBMA has very clear interests in filing an anti-dumping complaint, as it has already been successful with a similar endeavour this year. Back in February, following an EBMA complaint against China and Taiwan, the European Commission imposed a 34.4 per cent tariff on Chinese bicycles. These tariffs reduce consumer choices and give European manufacturers the breathing space they need for long-term price increases. Suspiciously, the Commission's press release reads exactly the same way as the Bicycle Manufacturers statement: it first displays increases in Chinese products, then shows the effective price differences between local European producers and those originating from Asia.
Tariffs are arbitrary and regressive taxes which hurt the poorest of the poor. A research paper on American tariffs exposed this as recently as January of this year:
"It appears tariffs are imposed in a regressive manner – in part because expenditures on traded goods are a higher share of income and non-housing consumption among lower income households, but also due to explicit regressivity."
In plain English, tariffs fall disproportionately on those least able to afford them.
The paper concludes that the lowest income categories are burdened at 1.5 per cent of disposable income, which is exponentially higher than the wealthier elements of society. For high earners, this percentage is below 0.3.
The protectionism that the EBMA is proposing hurts the most vulnerable consumers. Its claim that Chinese bikes are indeed heavily subsidised will be subject to an investigation by the European Commission, before it will announce its decision. It stands to reason that the Commission chooses to be careful with the imposition of such tariffs.
The Bicycle Manufacturers Association, tries to claim that new measures would bolster international environmental efforts:
"Anti-dumping measures are clearly in the EU's interest because e-bikes are a strategic, innovative industry for Europe's green and smart e-mobility future, and European consumers and suppliers all want local EU production to prosper."
For consumers, the "green and smart e-mobility" initiative will be more expensive and less likely to succeed if production is limited to the European continent. Market competition has made e-bikes cheaper and more accessible for consumers, in particular for those with low incomes. If the argument of the EBMA was indeed an environmental one, it would welcome a drop in prices, as price competition makes e-bikes and its emissions-free transportation accessible across the board.
As demand for e-bikes continues to grow in Europe, it is the responsibility of the industry itself to find the necessary innovative ideas that appeal to consumers. Their drive to lobby for tariffs is transparently self-serving and clearly detrimental to consumers. Europe needs more competition and consumer choice.
