EU To Move Against China And Vietnam Over Cheap Shoes

by Ulrika Lomas, for LawAndTax-News.com, Brussels

22 February 2006

The European Commission is set to put proposals to EU member states later this week which would impose punitive tariffs on imports of Chinese and Vietnamese footwear, in order to combat the alleged 'dumping' of such products in European markets.

According to reports in the European media, the EC has gathered evidence to suggest that the Chinese and Vietnamese authorities have provided shoe manufacturers with tax breaks and cheap loans and rents in order to allow them to undercut their European counterparts.

EC trade spokesman, Peter Power was quoted by the Associated Press as confirming this week that:

"There is compelling evidence of serious state intervention in the leather footwear sector in both these countries. This involvement takes the form of cheap finance, non-market land rents, tax breaks and improper asset evaluation, leading to dumping."

The measures expected to be proposed by the European Commission on Thursday include the introduction in April of duties on Chinese and Vietnamese footwear imports (with the possible exception of some types of athletic footwear), which would be increased over the year to 20%.

Earlier this year, as it became clear that a new trade war was brewing, the Chinese government threatened to bring the matter before the World Trade Organisation if sanctions were imposed.

Meanwhile, in a letter to the Financial Times on the matter, published on Monday, Denmark's Minister of Economic and Business Affairs, Bendt Bendtsen warned of the likely impact of tariffs for European consumers.

He suggested to the UK business daily that:

"In my view anti-dumping policy should not be used to counteract globalisation and increased competition, if there is no need. Anti-dumping measures can be taken only if convincing proof of unfair competition can be found and if it is in the wider interest of the European Union."

Mr Bendtsen went on to reveal that:

"Our studies show that if consumers are to bear the full burden of an anti-dumping duty of, for example, 40 per cent on imports of shoes from China and Vietnam, the retailers' average price for a typical pair of leather shoes will increase from EUR67 to EUR84. For the consumer this amounts to a price increase of 25 per cent for a pair of shoes for daily use."

"It also shows that the total gain for the EU producers is just above EUR100m a year if an anti-dumping duty of 40 per cent is being levied on leather shoes from China and Vietnam. For the consumers and the user industries in the EC the total loss can be estimated to approximately EUR975m per year."

"In other words, for each EUR1 gained by the EU producers from trade protection, EU consumers and user industries have to pay almost EUR10."

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