The European Union removed a 49.1 percent tariff against China on a chemical used for pharmaceuticals, ending protection for Germany’s AlzChem AG.

The EU let lapse the duty on dicyandiamide, which is also used for powder coatings, water treatment, textile coloring and glues in cars, airplanes and windmills. The bloc imposed the levy in 2007 to punish Chinese exporters including Ningxia Yinglite Chemicals Co. for allegedly having sold the raw material in Europe below cost, a practice known as dumping.

The scrapping of the anti-dumping duty is the outcome of a review the EU opened in November 2012 into whether to renew the measure for another five years, a step that kept the protection in place pending the result. AlzChem, the 28-nation EU’s only producer of dicyandiamide, asked for a renewal, asserting the levy’s repeal would likely lead to continued Chinese dumping and further injury to the company.

“There is no likelihood of recurrence of injury,” the EU said today in Brussels. The removal of the import levy will take effect after the decision is published in the European Official Journal by Feb. 15.

China’s share of the EU’s dicyandiamide market fell to 15 percent to 20 percent in the 12 months through September 2012 from 40 percent to 45 percent in 2007, according to the bloc. Over the period, AlzChem’s dicyandiamide business “improved significantly,” said the EU.

When imposing the duty against China in 2007, the EU said a French subsidiary of Germany’s Merck KGaA (MRK) used dicyandiamide to make a diabetes medicine known as metformin.

Price Increases

Merck had argued that price increases from the levy would create a “concrete risk” of being forced to close down two French sites specialized in metformin production and eliminate 270 jobs, according to the bloc, which countered at the time that “the duty could at least partly be absorbed and should not lead to significant price increases of metformin.”

In today’s EU decision, Lyon, France-based Merck Sante SAS is listed as a user of dicyandiamide. In 2007, the bloc listed Merck Sante and Germany’s Lanxess GmbH as users.

Source: Bloomberg

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