The European Commission has adopted definitive countervailing duties on imports of aluminum converter foil from China. The level of anti-dumping duties imposed on this product several weeks ago ranged from 15.4% to 28.5%, and the combined duties range from 16.1% to 46.7%. One aspect of the Commission's reasoning relates to the the role of the Chinese Communist Party ("CCP") at the highest decision-making level of certain banks. We set out that reasoning below.
In its decision imposing the countervailing duties, the Commission explained that under Articles 3 and 2(b) of the basic EU anti-subsidy regulation, when ascertaining whether State-owned banks are acting as "public bodies," "evidence that a government exercises meaningful control over an entity and its conduct may serve, in certain circumstances, as evidence that the relevant entity possesses governmental authority and exercises such authority in the performance of governmental functions."
Here, the Commission considered the situation of the Export-Import Bank of China ("EXIM bank"). In considering the "Ownership, formal indicia and exercise of control by the GOC [Government of China]," the Commission looked at a number of factors, one of which related to the role of the CCP:
(158) The Commission also found that State-owned financial institutions, including EXIM bank, have changed their Articles of Associations in 2017 to increase the role of the China Communist Party (‘CCP’) at the highest decision-making level of the banks ( 33).
(159) These new Articles of Association stipulate that:
— the Chairman of the Board of Directors shall be the same person as the Secretary of the Party Committee;
— the CCP’s role is to ensure and supervise the Bank’s implementation of policies and guidelines of the CCP and the State; as well as to play a leadership and gate keeping role in the appointment of personnel (including senior management); and
— the opinions of the Party Committee shall be heard by the Board of Directors for any major decisions to be taken.
(160) This evidence shows that the GOC exercised meaningful control over the conduct of these institutions.
Footnote 33 cites to a June 2018 Reuters article which explains the following change in government policy:
China’s listed mid-tier and regional banks will face added pressure to curb risky activities following the formal establishment of Communist Party Committees at the lenders, bankers and analysts say.
China’s 40 listed banks have announced changes to their articles of association to add the committees, with 26 making announcements after the start of the year.
Many specified that the organizations would be consulted before corporate strategy is agreed upon.