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China's textile industry may face further investigation from the European Union, after the largest ever anti-dumping tariff on the nation's textiles was imposed on certain chemical fabric products last year.

The European Union has notified China about an anti-absorption investigation into chemical fabric cloth imported from China, a spokesman from the China Chamber of Commerce for Import and Export of Textile (CCCT) said.

The investigation will cover more than 1,000 textile enterprises. The value of relevant products is over US$487 million.

This shows that "the European Union's restrictions on exports from China are getting stricter," said Lu Li, an official from the CCCT.

The European Union last year started to impose a five-year anti-dumping duty on certain finished polyester filament fabrics from China. The tariff, imposed on nearly 1,000 textile enterprises, ranges from 14.1 percent to 56.2 percent.

The anti-dumping duty has decreased the market share of related Chinese products in the European Union to 6.5 percent, compared with 55 percent before the punishment, according to CCCT statistics.

The anti-absorption investigation, when completed, may double the anti-dumping rate of these products.

The investigation aims to discover whether the export price is decreased, meaning the sale price in the European Union is not being influenced by the anti-dumping duty.

"Though the market share of these products has decreased dramatically as a result of the duty, the price did not decrease much," China Business News quoted Cao Xinyu, from the CCCT, as saying.

Under EU regulations, the dumping margin will be recalculated if the point of absorption is found.

The investigation, though not officially published yet, has drawn immediate attention from the industry in China. The CCCT is gathering enterprises to work on the action needed against the investigation.

Enterprises said they have prepared for the investigation. "We are preparing the necessary materials to prove to the European Union that we did not absorb the cost," said a spokesperson from the Zhejiang Zhengkai Group Co Ltd, which attained market economy status during last year's investigation and was charged with 14.1 percent duty, the lowest among Chinese enterprises.

Anti-absorption investigations, according to Wu Xiaochen, an anti-dumping expert with Seafront Law Firm, generally last less than one year. Wu encouraged enterprises to react actively to the investigation to protect their interests.

The European Union has previously initiated an anti-absorption investigation into sodium cyclamate from China, but cancelled it when no absorption was found.

(China Daily December 22, 2006)