China's shoe makers face hefty EU duty
By Jiang Wei (China Daily)
Updated: 2006-02-23 05:52

Chinese leather shoe manufacturers are likely to face anti-dumping duties of nearly 20 per cent in the European Union (EU) market during the year.

An unnamed source close to the situation told China Daily yesterday that the European Commission is likely to impose a 4.8 per cent penalty duty on made-in-China leather shoes beginning this April.

The figure will be phased up to 19.4 per cent by October, the source said.

Sports shoes and children shoes will be excluded from the scope of the duties.

The European Commission is scheduled to submit the draft tariffs to the EU tomorrow, and it will then be discussed at the March 9 meeting of the Anti-dumping Committee.

If the planned provisional duties are approved, they will be imposed early in April.

Su Chaoying, vice-director with China Leather Association, said the European Commission was not justified to decline the market economy treatment of Chinese enterprises and impose an anti-dumping duty on them.

The European economy bloc declined to give market treatment to the 13 Chinese leather shoemakers its delegation investigated last September.

To figure out whether Chinese enterprises dumped in the European market, the European Commission will compare their export prices with production costs.

But since China has not been granted a market economy status by the EU, enterprises involved in the anti-dumping investigation have to win a market economy treatment separately through on spot investigation. Otherwise, the EU side will take the cost of a third country as its substitute.

If a country like Brazil was taken as a substitute country, it could be a vital blow to Chinese companies as China has cheaper labour, material resources and a mature industrial chain.

"The European conclusion on the market economy treatment issue is groundless," Su said.

The EU said they declined to grant the market economy treatment to Chinese shoe makers because they got governmental allowance.

"The tax rebates and other forms of allowance they have is also enjoyed by European companies," he said.

Official comments from China's Ministry of Commerce, the country's trade watchdog, are not yet available.

Some trade experts in Beijing predict that the Chinese Government, in an effort to reduce the dumping charge by the EU, may offer to impose an export tariff or cap the export volume of footwear.

Although initiated by some European footwear enterprises, the dumping charge also aroused strong debate among the European manufacturers.

Some well-known European shoe companies recently condemned Brussels' plan.

The European Branded Footwear Coalition (EBFC) said the European Commission risked repeating the mistake of last summer's "bra wars" over textile imports.

European textile makers last year called for governmental protection against textile and garments imported from China, fearing Chinese exports would flood their market and hurt local industry after the global removal of quotas on textile trade.

The conflict was concluded with a bilateral agreement that capped the annual growth rate of China's textile export to the European market.

The coalition said the proposed duties would put higher prices on shoes, as much of the value was generated in Europe.

"We are concerned that setting the duty at a rate that cannot be absorbed by manufacturers and retailers will ultimately be borne by European consumers," it said.

EBFC is an industrial group that consists of a number of famous European shoe brands, such as Clarks and Timberland.

China produces about 8 billion pairs of shoes a year, according to the commerce ministry. Guangdong Province, the centre of China's shoe manufacturing, accounted for about half of that production in 2004 and exported 2.5 billion pairs.

Foreign-branded comp generated a large proportion of the overall production.

(China Daily 02/23/2006 page9)