5 June , 2008 - Chinese companies found guilty of dumping monosodium glutamate (MSG) in the European market have been hit with added trade charges of up to 40%.

The European Union announced the decision as it imposed an anti-dumping duty rate of 33.8% on both  Hebei Meihua MSG Group Co. Ltd and Tongliao Meihua Bio-Tech Co. Ltd.

Fujian Province Jianyang Wuyi MSG Co Ltd had an extra duty of 36.5% imposed while a third rate of 39.7% was placed on a third group identified only as “All Other Companies”.

These anti-dumping duties have been put in place for an initial period of six months but they can be extended for up to five years. The EU said the purpose of the duties was to protect the sole MSG producer in Europe – the French-based subsidiary of Japanese corporation Ajinomoto.

The charges were imposed after an EU investigation into the activities of Chinese firms selling MSG into Europe between April 2004 and  to June 2007. Under global trade regulations, the EU was able to impose the charges after it found a number of companies from China had been selling MSG - a widely-used flavour enhancer and food additive – at below cost. It also found the activity had been damaging to the European MSG industry.

In a determination published in the EU Official Journal, it said that from 2005 Chinese imports had risen from 4,701 tonnes to 34,613 tonnes – an increase of 636%. This saw the market share of Chinese companies surge from between 3-7% in 2005 to a high of 43% during the inspection period. This occurred despite a decrease in consumption within the EU.

The report also found that Chinese producers were the only ones that lowered their prices while “the Community producer and exporters from other third countries increased their prices following growing costs of production.”

Chinese firms undercut Ajinomoto by up to 24% last year, and falling sales forced the Japanese-owned firm to cut production, which in turn put jobs at risk.

The EU investigation found: “This increase in imports from the PRC coincided with the deterioration of the situation of the Community industry. In FY2006 the import volumes from the PRC increased by 142 % while the Community sales volume increased by 1 %.

“In FY2007, the import volume from the PRC increased by a further 201 % and sales prices decreased by 4 % while the Community sales volume decreased by 25 percentage points. As a result, the Community industry suffered a decrease in its sales volumes on the Community market and a resulting loss of market share of 12.5 percentage points during the (investigation period) IP.

“Price suppression by the dumped Chinese imports did not allow the Community industry to raise its sales prices to the level which would eliminate the losses and further improve its financial situation.”

The companies affected have the right to make their views known in writing and they can request an appeal hearing.

05/06/2008

Source: www.flex-news-food.com