Hong Kong floppy disk manufacturers yesterday welcomed the European Commission's (EC) decision to halt a long-running investigation into allegations that 24 local companies breached circumvention rules. Their relief, however, was tempered with caution over suggestions in Brussels that further action over tariff breaches might be taken as a result of a probe by Uclaf, the EC's anti-fraud service. An official for one of the companies named in the EC investigation, Hong Kong Plantron (HK), said the issue had cast a cloud over the company for several years. The company had suffered even though its main market was the United States, the official said. 'Business orders dropped by 20 per cent generally since the issue was raised three years ago. 'The long investigation was very time-consuming and we could not do anything to clear ourselves,' she said. The company makes 10 million disks a month and now pays a duty of 10 per cent on its exports to Europe. Addis Fan, an official for another company on the EC list, Yokohama Magnetics, said that the commission might have had good reason to launch its probe. Mr Fan said that some companies in the industry had been acting dishonestly, falsely declaring the origin of disks to circumvent the European trade bloc's high tariff barriers. The probe had had no adverse effect on Yokohama's business because it now exported only to Japan and the United States, he said. Mr Fan added that the export of micro-disks accounted for only 20 per cent of total sales. Brian McDonald, the deputy head of the EC office in Hong Kong, confirmed yesterday that the anti-dumping investigation had been stopped because of insufficient evidence against the manufacturers. He said no further investigations would be conducted. He would not say whether the EC's focus would now be shifted to companies in Macau, as was rumoured in Europe. The EC accused Hong Kong manufacturers of circumventing anti-dumping duties on 3.5-inch disks made in China and Taiwan by faking country-of-origin certificates. Since an anti-dumping investigation in 1993, all imports of disks into the European Union from China have been subject to a 39.4 per cent tariff, while Taiwan disk exports face a 32.7 per cent tariff. Hong Kong's exports are subject to duties of 6.7 to 13.3 per cent for individual companies, or a residual rate of 27.4 per cent.
