EEC’s decision will have an adverse impact on exports of John Deere grain harvesters
The EEC Panel Meeting of December 25, 2012 imposed a preliminary special duty of 27.5% of customs value on grain harvesters and their modules. Analysis of the information obtained during investigation revealed that the decision to introduce a special protection measure was well founded.
For instance, in the years of 2009 thru 2011, imports of grain harvesters to the CU countries increased by 19.9 % in absolute terms, and in H1 2012 it increased by 92.3 % year on year. This resulted in smaller production (by 14.4%) and sales (by 43.4%) volumes and higher (by 67.4%) non-distributed stocks of grain harvesters. Eventually, grain harvester manufacturers saw their CU market share shrinking by 14.6 p.p. and profit declining by 3.6 times. The foregoing trends saw further development in 2012.
The special protective duty will be differentiated: it will be set at 26.7% in 2013, 26.2% in 2014, 25.7% in 2015, 25.2% in 2016. The rates will supplement the currently applicable 5% duty. This protection measure is to be applied to harvester modules (partly knocked down harvesters - no wheels, cabin, and other modules), which are currently imported duty-free to the CU countries.
Since the rate of the preliminary protective duty being in force since February 2013 was higher than the value of the final duty, customs services of the CU countries will have to compensate for the difference to exporters who imported such harvesters and paid the duty at a higher rate at that time.
John Deere company will suffer most from the introduction of the duties. The EEC's decision makes it unlucrative for the company to export both its grain harvesters to the Customs Union countries and perform their semi knocked down assembly in the Moscow Region.
N. P. Volovik, Head of Foreign Trade Department