Indonesia is gearing up to encounter an inquiry from the European Union (EU) following an allegation that Indonesia has acted as an intermediary for Chinese-made bicycles into EU countries, according to a top official.

Deputy Trade Minister Bayu Krisnamurthi said on Thursday that the government would try to prove to the EU that their allegation that some of the Indonesian-made bicycles it imported were actually made in China was “untrue”.

“The EU must have supporting data for its allegation. The EU will respect the protocols of trade dispute settlements under the World Trade Organization [WTO] regulations and Indonesia will cooperate by providing the required information and data,” he told The Jakarta Post in a text message.

He was commenting on a recent report that the EU had threatened to expand its 48.5 percent anti-dumping duty on bicycles from China to Indonesia amid an allegation that Chinese exporters may have shipped bicycles to the 27-nation EU via Indonesia to avoid the levy.

The duty, which is in place for 19 years, is meant to punish Chinese exporters for selling bicycles in Europe below cost, Bloomberg reported on Wednesday. Other countries that face similar allegations include Malaysia, Sri Lanka and Tunisia.

In 2010, the EU had suspected that some of the Indonesian-made bicycles that it imported were actually made in China. At the time, however, the EU did not carry the allegation to a higher level of investigation, according to the Trade Ministry.

Separately, the Trade Ministry’s director for trade security, Ernawati, said on Thursday that her office had urged local bike producers to take part in the inquiry to avoid paying a 48.5 percent anti-dumping duty.

Indonesia produced 3.5 million units of bicycles in 2011, in which around 30 percent was exported to the EU countries, according to the association of Indonesian bicycle producers (AIPI).

According to the Trade Ministry, Indonesia received US$86 million in export value of the bicycles to the EU alone last year. Indonesia also exports bicycles to other countries such as Taiwan, US and Saudi

Arabia.

Major players among the bike producers include: PT Insera Sena Polygon, PT Wijaya Indonesia Makmur (Wim Cycle) and PT Terang Dunia Internusa.

Polygon, which has a capacity to produce at least 800,000 bicycles annually, exports around 300,000 to 400,000 bikes yearly to the EU, making them the biggest Indonesian bicycle exporter, according to AIPI.

AIPI chairman Rudiyono told the Post that the claim was “untrue” and his members were “prepared” to take part in the inquiry.

Similarly, Polygon promotion manager, Peter Mulyadi, rejected the allegation, saying that while the firm imported the spare parts for its bicycles from Japan, Taiwan and China, “our bicycles are Indonesian-made”.

Separately, head of delegation of the EU to Indonesia, Julian Wilson, said in an email that the European Commission had started an investigation concerning the possible “circumvention” that had been imposed on imports of bicycles originating from China.

“There is sufficient prima facie evidence that the import duties into the EU on these bicycles from China are being circumvented by means of transshipment via Indonesia, Malaysia, Sri Lanka and Tunisia and by means of assembly operations of certain bicycle parts from China via Indonesia, Sri Lanka and Tunisia,” he told the Post. (asa)