Seeing the full picture – Value chain integration and environmental protection
In our trade defence projects, we always assess the status of the entire European value chain. Dynamically addressing unfair competition at the various levels is essential to the overall health of the entire EU economy. Two examples to illustrate this are as follows:
Glass fibre-based lightweight materials value chain
The glass fibre-based lightweight materials value chain starts with glass fibre reinforcements (GFR). GFR are essentially sand transformed into bendable glass fibre filaments. These filaments can then be used either as such or transformed into glass fibre fabrics (GFF), open mesh fabrics (OMF) or other products such as non-woven materials.
In downstream industries, GFF and GFR are combined through special processes with resins to create lightweight composite materials. The latter are increasingly used to replace heavier materials by industries seeking green, high-tech and lightweight solutions, such as automotive, marine, aerospace, wind energy, electrical and electronics, infrastructure, sports and recreation, storage, pipes, and building and construction. OMF and non-wovens are for instance used in the construction sectors to help increase the insulation properties of buildings.
The EU glass fibre industries have made strong commitments and investments during the last two decades to help EU user industries develop new and innovative products and solutions. For instance, the R&D of the EU GFR and GFF industries allowed wind turbine blade makers to increase the length of the rotor blades from 30m to 107m, leading to an increase in power output from 2,000 kW to 20,000 kW per wind tower over the last 20 years. Lightweight components and parts significantly decrease the weight of cars and trucks, and composite sewage pipes and pipe repair kits reduce the time streets have to be blocked for repair activities which has a positive impact on traffic, just to name a few examples.
All these improvements were possible because of the EU value chain integration. Losing in particular the upstream parts of the glass fibre value chain would jeopardise the entire EU green initiative. If downstream products had to be made from Chinese inputs (only), their carbon footprint would be significantly higher.
Losing the EU GFR and GFF industries would also reduce R&D activities and the creation of new solutions and uses, which again would set back green initiatives in the EU. Further, downstream EU industries would likely find their profit margins squeezed to nothing by Chinese competitors given China’s policy objective of gaining global dominance in the glass-based lightweight materials sector.
Bicycles and e-bikes from China
The pedal-assisted e-bike (EPAC) as used widely today in the EU was an invention of the EU bicycle industry. While the early versions in the late 2000s were perceived more as a product for the elderly, the upgrade in design, use and applications in the teen years of the twenty first century revolutionised the product and the market. EPACs’ popularity increased in all segments of the population. They became an alternative to car and public transport for short-distance commuting, but also allowed a wider range of people to experience the pleasure of multi-day bike tracking tours and even alpine mountain biking adventures. New industries were created around EPACs, from bike leasing businesses for companies to offer affordable EPACs to employees, to urban transport projects, to special holiday packages in the tourism industry. During the pandemic, biking was one of the few allowed outdoor activities. EPACs and bicycles were an important contributing factor for individuals’ mental and physical health.
All this was possible thanks to the imposition and maintenance of anti-dumping and anti-subsidy measures on imports from China of bicycles and EPACs.
Between 2014 and 2018, Chinese producers had started to copy the EU EPAC technology and within only 3 years obtained an EU market share of almost 40%. With a substantial loss of business, smaller EU producers were being pushed towards bankruptcy; if the trend had continued, there was a real threat that the entire EU industry would disappear.
In fact, the same had happened in the 1990's in the US. After the US administration closed without measures an anti-dumping investigation of imports of bicycles from China, Chinese products took over the market and within a couple of years, the US industry including the former inventors of the BMX and the mountain bike, were all pushed out by cheap Chinese products. However, the low-priced bicycles did not stimulate an increase in consumption. With the resulting lack of innovation, the market dropped substantially, as consumers had no incentive to invest in new products.
The EU EPAC industry faced the same threat in 2016-17, but this was averted thanks to the anti-dumping and anti-subsidy measures imposed following a complaint by the European bicycle manufacturers. Watch the European Commission's informational video here.
Today, bicycles and EPACs in all models and price ranges are produced in over 20 EU Member States and by all sizes of companies, from family shops to large multinational companies. The EU industry has made substantial investments in the improvement of design, range and functionality of EPACs. Thanks to the measures, it has also been possible to relocate the production of an increasing number of bicycle and EPAC parts back to the EU. Over 1 million jobs are associated with the current level of cycle production in Europe, which can scale up to 2 million by 2030.
The Politecnico Milano has calculated that one EPAC made in the EU represents more than 100 kg CO2 and other emissions saved, as compared to an EPAC imported from China. If the entire annual 2022-23 EU demand for bicycles and e-bikes, approximately 20-22 million bicycles and e-bikes, were imported from China, their production and importation would generate over 2 million tonnes more in CO2 and other emissions than if the bicycles and e-bikes were produced in the EU. As a result, each green skilled job that is re-shored to the EU helps to cut 30-50 tonnes of emissions per year.
Both the GFR/GFF cases and the bicycle/e-bike cases highlight the importance of proper consideration of the overall value chain benefits in trade defence cases.
