Chinese optical-fibre cables face punitive EU tariff

Optical-fibre imported from China could face up to a 44% tariff after an EU investigation has supported allegations of state-backed distortion and dumping behaviours, and Deutsche Telekom isn’t happy.

After more than a year’s anti-dumping investigation, the European Commission has found that a number of state-controlled Chinese companies have been selling their optical-fibre cables in the European market at prices lower than cost. Such dumping practices have caused material impact on their European competitors including decreased sales and reduced market share. The complaint was filed by Europacable, a trade association, which represents fibre companies in Europe.

The investigation also determined that the means through which the exporters could afford to undercut pricing so aggressively was the unfair subsidies they receive from the Chinese government, as it turns out many of them are either directly or indirectly controlled by the state. In one of the more illuminating sections, the document (3.1.1.4, pp.21-25) detailed how the state and the ruling Communist Party have controlled the parent company of one of the defendants. Such control practices are found to meet the EU regulation’s definition of significant distortion of market (para. 70, p.13).

As a result, starting from Thursday 18 November, the day after the decision was published, optical-fibre cables imported from China are going to face up to 44% import duty. The companies and the anti-dumping duty rates their products are subjected to are detailed in this table (para. 611, pp.116-117). The level duty is set in alignment with the companies’ dumping margin the investigation has determined (para. 565, p.111).

During the investigation the clash of interest between local optical-fibre suppliers and the customers who buy fibre cables has been laid bare. Few customers (a “modest number of users”, as the legal document put it) have cooperated with the investigation, representing less than 12% of all optical-fibre import from China to the EU and less than 9% of total optical-fibre consumption across the EU during the investigation period.

One of the customers that did respond to the investigation was Deutsche Telekom, one of only two major telecom operators that have cooperated with the investigation, the other one being Proximus of Belgium. DT is far from happy with the inevitable rise in price. “It argues that anti-dumping duties on OFC from China can lead to significant issues to secure Union cable demands and risk hindering or delaying network rollouts and would lead to a significant cost increase for EU customers,” the legal document records. “It [DT] also claims that prices have decreased due to existing overcapacities and all players have invested in increasing capacity during the alleged shortage of supply a few years ago.”

The Commission conceded that anti-dumping would drive price up, but it was “due to the unfair export behaviour of Chinese exporters,” it argued. “Furthermore, the investigation established that OFC represents only a minor share of the total rollout cost of digital networks projects—in the case of 5G being much less than 5%. The purchases of the product under investigation by the cooperating telecom operators represent a marginal percentage of company turnover, and the firm purchase a significant part of its OFC from other sources.”

In other words, Komm damit klar, Telekom!

Get the latest news straight to your inbox. Register for the newsletter now