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EU rejects 5-year duties on Chinese shoes

(Shenzhen Daily/Agencies)
Updated: 2006-08-07 12:57

A Swedish-led group of European Union countries rejected a plan to prolong tariffs on leather shoes from China and Vietnam, raising the possibility the punitive levies that shield Italian producers will lapse in two months.

Thirteen mainly northern European countries opposed setting five-year duties to prevent Chinese and Vietnamese exporters from selling footwear in the 25-nation bloc at below cost, a practice known as dumping. The rejection leaves the EU without a plan for when provisional measures expire Oct. 7.

"Our job now is to see if there's a way out of this," Peter Power, a European Commission spokesman, told reporters in Brussels late last week. "There are no guarantees this is achievable."

The dispute highlights a split between northern and southern EU nations over protection against surging imports of manufactured goods from lower-cost Asian nations. China supplied half of the 2.5 billion pairs of shoes sold in Europe last year and the EU's trade deficit with China was a record 100 billion euros (US$128 billion) in 2005.

The EU's March decision to punish Asian shoe manufacturers for "dumping" sharpened tensions with China stemming from European restrictions on Chinese textiles and complaints that China is ignoring European copyrights and trademarks. EU-China trade is worth 200 billion euros a year.

The Swedish-led veto of five-year tariffs may force proponents of protection to accept an alternative plan that would impose anti-dumping duties on shoe shipments that exceed quotas. Italy led a successful drive last month against a quota-based system to allow 145 million pairs of leather shoes from China and 95 million pairs from Vietnam a year without punitive tariffs, saying it was too generous.

That plan by EU Trade Commissioner Peter Mandelson, like the one rejected last week, made a concession to Italy by subjecting children's leather shoes to the proposed anti-dumping duties. Mandelson backed down after Italian manufacturers filed a court case against the exclusion of children's footwear under the provisional duties.

European shoe retailers representing companies such as Adidas AG, Puma AG and C&J Clark have argued that duties on Chinese and Vietnamese footwear will cost consumers as much as 150 million euros in higher footwear costs.

Europe's 8,000 leather-shoe manufacturers, some of which employ fewer than 10 people, cite the threat of job losses. These concerns are strongest in Italy, Portugal and Spain, where four-fifths of EU leather shoes are produced.

Under EU rules, the commission can impose provisional anti-dumping duties for six months and the bloc's national governments can turn those measures into "definitive" five-year levies at the same or different rates. Definitive measures require the backing of a majority of EU nations.