Italy’s and Southern Europe's persistent shoe lobby won two important battles in Brussels and Strasbourg in the last few days, although it has not yet won the war on either front. While it has not yet put out an official document on this, the European Commission has stuck to its recommendation to extend the anti-dumping duties on Chinese and Vietnamese leather shoes for 15 months, and a technical working group of the European Council of Ministers indicated its support today, reversing a negative vote cast by the anti-dumping committee of the Commission last Nov. 19. At the same time, the European Parliament urged the Commission to come up with a final compromise proposal for mandatory labels of origin on shoes and other products imported from a number of countries outside the European Union.
Italy’s chief trade negotiator, Adolfo Urso, expressed great joy today after the representatives of Germany, Austria and Malta in the working group of the Council indicated that they will probably abstain on the contentious issue of the anti-dumping duties when it comes to a vote at key meetings of Coreper and the Council next Dec. 17 and 22.
As 15 of the 27 member states of the European Union have said lately that they would support the anti-dumping proposal or abstain, Urso gave it for granted that the Commission’s proposal will pass. Several other meetings are planned on the issue in the next few days, however.
Last Nov. 19, fifteen governments had voted against the Commission’s initial proposal to extend the anti-dumping duties. They were Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands, Sweden and the U.K. All the other member countries supported the European Commission’s call for a 15-month extension of the duties except for Lithuania and Slovakia, which abstained. Abstention on such an issue is equivalent to approval in Brussels.
The anti-dumping committee is only an advisory body, and this time the Commission overruled its opinion, as it did in 2006 when 12 of its members voted against the duties. The same goes for the technical committees of the Council of Ministers, and it is still possible that some governments will again change their positions in one direction or the other by Dec. 22, in exchange for various concessions.
Expressing “extreme dismay” at the EU member states’ “sudden U-turn,” the European Footwear Alliance questioned the apparently inexplicable about-face of the German government, which has been in favor of liberalization until now. It seems that it decided to abstain on condition that the anti-dumping duties will come to a definitive end in 15 months’ time, although the Commission itself has admitted that there can be no legal guarantee for this to happen. European shoemakers can find new reasons to complain, and the Commission will then have to go ahead with another investigation.
Powerful horse-trading is suspected. There were reports in Brussels that Italian President Silvio Berlusconi called his Austrian counterpart on the telephone to persuade him to join the German position on the European Council. Manfred Junkert, director of the German Shoe Industry Federation (HDS), said the about-face of the German and Austrian governments “raises serious questions about the application of EU trade law and policy in these times of economic crisis.”
The EFA said it was consulting its members with a view to possibly launching a legal challenge. The organization, a recently constituted lobby that represents important brands such as Adidas, Nike, Merrell and Timberland directly and through various associations, including the Federation of the European Sporting Goods Industry (Fesi), has threatened to challenge the process by which the trade directorate of the European Commission determined dumping and injury to the European industry in the European Court of Justice. The Chinese government has indicated that it may lodge a similar complaint with the World Trade Organization.
A couple of weeks ago, the outgoing trade commissioner of the EU, Baroness Catherine Ashton, indicated that she was recommending the maintenance of the anti-dumping duties on technical grounds. Similarly, a majority of member states have been opposed to the labels of origin, but Baroness Ashton decided to address the European Parliament on this issue last Nov. 11, after setting up a technical committee intended to find a more acceptable solution. Representing the member countries, this new committee should hold its first meeting during the month of December and come up with a new draft proposal in December in January.
Observers predict that it will take several months – probably at least one year - before any decision is made on mandatory labels of origin, and here again, that decision will be subject to horse-trading, and thus political. The Italian government has insisted on the establishment of this new European regulation, but a majority of the other member governments has opposed it until now.
According to well-informed sources, a more acceptable compromise may be found by eliminating textile yarns and fabrics from the list of products due to be regulated and by broadening the number of countries exempted from the obligation of a label of origin. Initially, the exemption was supposed to concern only Norway, Iceland, Luxembourg, Switzerland and Turkey, but there is now talk of including some North African countries such as Tunisia and Morocco. Many factories continue to produce shoes there for companies in France, Belgium and other European countries.
The regulation is still expected to be applied to finished shoes and clothing as well as eight other categories including leather, leathergoods, household textiles, furniture and jewelry. Similar regulations exist for various products imported into the U.S., Canada, China and Japan, although the definition of national contents is not the same everywhere. The commission has found that the implementation of this regulation in Europe would increase manufacturing costs by €1.50 for a garment and by €2 for a pair of shoes, without counting the impact on inventories of labeled and unlabeled products.
A large majority of the members of the European Parliament in Strasbourg voted for the origin labels last Friday: 529 compared with only 27 negative votes and 37 abstentions. Members of the European Parliament had already voted in favor of this major in September 2007, based on the notion that consumers should be granted full transparency about the products that they buy. The recently signed Lisbon Treaty gives the European Parliament the same power to make decisions as the European Council of Ministers. Should the two bodies differ on any points, a compromise must be found between their respective positions.