Shoe makers prepare to battle EU
By Jiang Wei (China Daily)
Updated: 2006-03-07 06:14

Chinese shoe manufacturers are preparing for a final battle against the European Union (EU) dumping charges before a primary ruling on punishment is made, in a bid to win favourable tariff rates.

Wu Zhenchang, board chairman with Chuangxin Footwear in Guangdong Province, said his firm was contacting other enterprises and collecting information to try and prove they are not harming EU businesses.

Facts and figures: * The European Union implemented a licensing and inspection mechanism on China's shoes exports beginning in February, 2005. * It launched investigations into the dumping of safety shoes and leather shoes imported from China last June and July respectively. * Last month the EU trade chief proposed penalty duties of up to almost 20 per cent being phased in on Chinese footwear.

The company, with seven other shoe makers, last month set up a coalition to counteract the charges of dumping from the EU.

The coalition has the support of around 130 domestic shoemakers.

Wu said they would also urge the European Commission to re-consider giving market economy treatment to Chinese shoemakers during a visit to China by an EU delegation.

The delegation will be here on Friday to discuss issues concerning dumping, according to a source closely watching the situation.

A salesgirl waits for customers at a department store in Nanjing, East China's Jiangsu Province, in this January 12, 2006 file photo.[newsphoto]

The EU delegation is scheduled to meet Chinese enterprises in Hangzhou in East China's Zhejiang Province, and will come to Beijing for talks with the Ministry of Commerce and industrial associations on Sunday.

Meanwhile, enterprises are also being urged to argue against the substitute country issue. Since China is not recognized as a market economy, the EU has chosen a third country in this shoemaking case, Brazil to compare Chinese companies' prices.

"It is unreasonable to take Brazil as a substitute country as the industrial structure is quite different and production costs are much higher in the country," said Su Chaoying, deputy director with China Leather Association. He added that he recommended Indonesia as the substitute country, as costs there are lower.

Wu expected that the shoemakers' coalition could minimize the penalty duties for some Chinese firms.

Last month EU Trade Commissioner Peter Mandelson recommended phasing in 19.4 per cent anti-dumping duties on Chinese shoes and 16.8 per cent on Vietnamese footwear, over a six-month period.

"There is compelling evidence of serious state intervention on a large and strategic industrial scale," Mandelson told European media. "This state-supported dumping is causing serious injury to European industry."

His proposal is scheduled to be discussed at the Anti-dumping Committee meeting on Thursday.

If approved by a majority, the temporary tariffs will start at 4 per cent in April and increase to the highest levels over six months. Children's shoes and high-tech sports shoes will be exempted.

Before coming up with the tariff proposal, the European Commission declined to give market economy treatment to 13 Chinese leather shoemakers that were investigated last autumn for dumping.

Fu Donghui, a senior legal expert with Allbright Law Office in Beijing, said the EU gave market economy treatment to several Chinese firms (not the shoe sector) involved in other cases of dumping after 1997.

"We cannot believe that no company was given the treatment in this shoemaking case, since the footwear industry is one of the highest market-oriented sectors in China," he said. "Now we see the EU going backwards with dumping charges," he added.

Possible duties on Chinese footwear would be a big blow for Chinese players, as the EU is the second largest export market for Chinese enterprises.

The dumping charge has also been condemned by some EU and US footwear giants which operate plants in China, for they are likely to shoulder higher costs.

It would also mean European consumers paying more for their shoes. If shoe export prices increase by US$1 per pair, EU consumers would pay around US$1 billion more for footwear every year.

(China Daily 03/07/2006 page9)