Ajinomoto Wins Important EC Victory; Provisional Anti-Dumping Duties of Up to 39% Imposed on Chinese MSG

June 3, 2008

Cleary Gottlieb won an important victory for Ajinomoto Foods Europe (“AFE”) when the European Commission decided on June 3 to impose anti-dumping duties ranging from 33% to 39% on imports of monosodium glutamate (“MSG”) originating in China.

MSG is a food additive mainly used as a flavor enhancer. AFE is the sole European MSG producer, with facilities based in Nesle, France, some 100 km north of Paris.

The Commission found that Chinese MSG had been sold at unfairly low prices on the European market (the average dumping margin was found to have been 39%) and, as a consequence, Chinese imports had soared by 600% in only two years. This dumping led to significant material injury for the AFE. The Commission found that no Chinese producer could be considered as fulfilling the conditions for market economy treatment (MET), in particular because they were still subject to significant State interference and distortions carried over from the non-market economy system or because they failed to present accounts in line with International Accounting Standards (IAS).

Importantly, the Commission also found that the imposition of measures was in the Community interest. In particular, the measures will have no material effect on importers or users of MSG, and will actually be beneficial to competition. MSG users will still be able to source from AFE as well as from other non-Chinese producers (located in Indonesia, Vietnam, Brazil, etc.), which are not subject to the duties and which had been virtually eliminated from the European market by the dumped Chinese exports. The provisional measures are in place for 6 months, after which the Council will have to decide on whether to convert the provisional measures into definitive measures valid for up to five years.