Mandelson To Extend Shoe Duties For Asian Countries

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

03 October 2008

The EU's Trade Commissioner, Peter Mandelson, is set to go ahead with plans to review an extension on the 'anti-dumping' tariffs surrounding imports of leather shoes from China and Vietnam, despite strong protests from several Asian and European countries.

The legislation, which levies a surplus charge of 10% on shoes from Vietnam, and 16.5% on shoes from China, was first introduced in March of 2006 after several EU shoe manufacturers pleaded with the EU to introduce a measure to prevent the market from being swamped with cheap imports.

At the time, Mandelson had pushed for the introduction of a 5-year tariff as requested by Italy, the country most at risk from cheap imports, but finally accepted a 2-year period as proposed by France.

However, EU trade experts who have monitored the effects of the tariff have reason to believe that their foreign counterparts have developed a method of avoiding the tax. By cleverly exporting the goods needed to construct the shoes to third countries in order to complete the making of them there, manufacturers are subsequently able to sell them on to European countries for even cheaper prices than the anti-dumping law stipulates as legal.

In light of this, Mandelson announced at the beginning of last month that he was preparing to review the effectiveness of the anti-dumping legislation in order to push for an extension on the tariffs - something he has wanted since its introduction two years ago.

As with the introduction of the first legislation - which drew objections not only from China and Vietnam, but several European countries, too - this fresh proposal has subsequently plunged Mandelson into another difficult situation: removing the tax altogether will simply pave the way for an influx of cheap imports, yet extending the tariff could promote a large-scale backlash from foreign shoe manufacturers which may encourage even more countries to invent methods of evading the tax as a consequence.

Such was the objection to the legislation back in 2006 that China threatened to take the EU to the World Trade Organisation over the issue, but eventually backed down.

EU shoe importers also stated that the introduction of such tariffs helped no-one, and would simply shield inefficient manufacturers from global competition to the detriment of consumers.

Late last week, Vietnam's Deputy Minister of Industry and Trade, Le Danh Vinh, made a last-ditch attempt to change the commissioner's mind, arguing that 15 out of the EU’s 27 member countries had objected to an extension of the tax at a recent meeting of the EU’s anti-dumping advisory committee.

Vinh stated that an extension of the tax will only serve to fuel the current global economic slowdown, and propel businesses which rely on foreign trade into further debt.

Mr Vinh added that if the commissioner decided to extend the tax, Vietnamese business would suffer significantly - especially as the country has been removed from the EU's generalised system of preferences (GSP) for the 2009-2011 period - and would threaten the likelihood of any Free Trade Agreement with the WTO from being approved.

However, the protest from other countries has done little to deter Mandelson from conducting the review, which was confirmed by a Commission spokesperson on Monday.

It is expected that Mandelson will make a final decision by the end of the week, with a review set to take place as soon as possible.

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