Three manufacturers filed a petition to request a probe into the alleged practice
The Secretariat of Foreign Trade (Secex) of the Ministry of Development, Industry, Trade and Services (MDIC) has started an investigation to determine the existence of dumping in imports of fiber optic cables from China. The investigation is based on a petition filed on October 31 by three manufacturers operating in Brazil.
In a letter published in the Daily Gazette in May, Secex reported that Italy’s Prysmian, Japan’s Furukawa, and Mexico’s Cablena had presented “sufficient elements indicating the practice of dumping” and the existence of “damage to the domestic industry resulting from such practice.”
“We want a level playing field. We don’t want to block anyone,” said Marcelo Andrade, an executive in charge of telecommunications in Latin America at Prysmian. The company has been operating in Brazil for 94 years and was part of Pirelli until 2005. Today it is an independent company listed on the Milan stock exchange.
Demand for fiber optic in Brazil is driven by home cabling, not only by Brazilian carriers, but also by regional Internet Service Providers (ISPs). Between the end of 2019 and the same period in 2022, the number of fiber broadband connections more than tripled. It went to 31.75 million connections from 10.21 million, according to data from the telecoms regulator Anatel. The complaint to the MDIC is limited to the fiber used in the retail market.
An industry executive said, based on conversations with distributors and former customers of Brazilian manufacturers of optical cables, that the Chinese product costs up to half the price of the Brazilian fiber.
The letter published by Secex on May 11, 2023, informs that the absolute dumping margin — the difference between the normal value and the export price of the product — was $9,234.44 per tonne of optical cables. This difference is almost 358% higher than the export price practiced by Chinese companies ($2,580.24 per tonne). The normal price used in the calculation is the one practiced in Mexico.
“The Chinese presence has intensified significantly since 2018. Today, Chinese companies have about 50% of the market,” said Carlos Eduardo de Oliveira, chief commercial officer at Cablena in Brazil. The company is part of the Carso Group, owned by Mexican billionaire Carlos Slim Helú.
The investigation will initially last 12 months and may be extended for a further six months. Its maximum duration will therefore be 18 months. Interested parties, such as domestic producers, importers, and exporters, may participate in the administrative proceeding.
In a note, Furukawa explained that at the end of the process, if unfair trade practices are confirmed, the application of an anti-dumping measure will be determined in the form of an ad valorem import tax rate for five years. The term ad valorem in this case refers to a percentage levied on the value of the goods. Payment must be made at the time of customs clearance of the goods.
The petition by Prysmian, Cablena, and Furukawa is inspired by an anti-dumping case filed in the European Union in 2021, which resulted in measures against the same product (optical cables) exported by Chinese manufacturers. The decision by the European Commission, the EU’s executive body, was issued last year, said Renê Medrado, a partner at Pinheiro Neto Advogados, the law firm that represents the three optical cable manufacturers.
“The letter confirms the existence of positive indications and evidence of the practice of dumping, the occurrence of material damage, and the existence of a causal link [between the dumping and the damage],” Mr. Medrado said. According to the lawyer, the government agency “understood that there is evidence that this sector [of fiber optics manufacturing] does not operate under market conditions.”
In the current phase of the administrative process, Chinese optical fiber producers and exporters will be selected to submit an investigative questionnaire.
*Por Rodrigo Carro — Rio de Janeiro
Source: Valor International