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Chinese Shoe Companies Launch Action Against EU

by Ulrika Lomas, for, Brussels

27 December 2006

Four mainland Chinese shoe manufacturers launched an action at the EU's Court of First Instance last week, complaining that the EU used flawed logic in arriving at anti-dumping duties imposed on their products in October.

The four companies, including Aokang Group, the biggest private producer in the country, claim that the EU failed to examine their prices properly before the anti-dumping tariffs were introduced. Chinese sources say that 1,200 Chinese manufacturers and traders are being hit by the tariffs, but that the cost of litigation is preventing most of them from taking action.

James Searles, a partner with Steptoe and Johnson in Brussels, representing the companies, said to the press that the Commission had used sampling rather than checking in depth, and that they had used Brazilian prices as a comparator, since China is not judged by the EU to be a 'market economy'. He said that the ECJ had already ruled against such practices. "This is a major policy issue relevant not just to this case, but all dumping cases involving China," he told Bloomberg.

The EU imported more than 1.2 billion pairs of shoes from China last year. Provisional duties had been imposed last March, but were due to expire in October. Peter Mandelson, EU trade commissioner, had pushed for 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. The tariffs (lower than the provisional ones, in fact) are 16.5% on Chinese shoes and 10% on Vietnamese shoes, but they only apply to shoes with leather uppers.

The UK voted against the measure; but abstentions from Malta, Cyprus, Austria and Slovenia (which count as votes in favour) were enough to swing the result in favour of the duties.

The other three Chinese companies making the complaint are Foshan Nanhai Golden Step Industrial Co, Sun Sang Kong Yuen Shoes and Wenzhou TaiMa Shoes.

A spokesperson for Peter Mandelson said that the EU would defend its position vigorously; but cases of this type often take years to resolve.

The Chinese authorities said in October that: "The anti-dumping measures taken by the EU against Chinese leather shoes lack a legal basis and factual evidence and harm the rights of Chinese leather shoe manufacturers. The Chinese side will closely watch this issue and see how it develops and will maintain the right to take corresponding measures."

Nguyen Gia Thao, president of Vietnam's Leather and Footwear Association (LEFASO), said: "it is certain that it will affect the jobs of between 60,000 and 70,000 workers in the industry and some small-scale enterprises will face bankruptcy."

According to the Chinese, 98% of enterprises in China's shoe making sector are privately run firms or joint ventures, and the State intervention claimed by the EU as a justification for its duties simply does not exist.

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