The European Commission has finally decided to close the review of a complaint lodged one year ago by European manufacturers of safety footwear, charging dumping by competitors in China and India. On the other hand the Commission is largely expected to propose at a meeting next July 20 some important changes in the anti-dumping duties on other kinds of leather shoes from China and Vietnam, which will stick for the next five years if the EU Council of Ministers supports them after the summer holidays.
The Council’s final decision is likely to be very political, and thus it may differ from the Commission’s proposal. As an indication of that, a technical committee of the Commission that was supposed to rule on Italy’s request for mandatory labels of origin on footwear, clothing and other products into the European Union on July 7 was postponed at the last minute to Oct. 10, two days after the planned enforcement of the new duties.
The Commission postponed the action, feeling that it would have been impossible to reach a qualified majority either in favor or against the origin labels, the day after some the European Parliament backed the measure with a majority of 95 percent of the 100-odd members present at the session. ANCI, the Italian shoe industry association, had financed a big advertisement in the prestigious daily Franfurter Allgemeine newspaper, with an open letter to German Chancellor Angela Merkel, stressing that it would benefit consumers. It had done the same earlier in two other important dailies – The Times in the UK and Le Soir in Belgium.
It can now be speculated that European governments will find a compromise that will take simultaneously into account Italy’s multiple requests for import protection and the opposition of China, Vietnam and several European government to the present provisional anti-dumping duties on leather footwear from those two countries. Safety shoes have already been removed from the list of items to be protected, but children’s shoes are likely to be reinstated.
The safety shoe complaint rejected by the European Commission initially covered a broad range of shoes with a protective toecap in various materials, including certain hiking boots and regular sports shoes. Intense lobbying by the Federation of the European Sports Industry (FESI) and by FAIR, the new association of footwear importers, persuaded the anti-dumping authorities in Brussels to limit the scope of the investigation, and subsequently to stop the procedure altogether.
FESI has apparently succeeded in getting performance sports shoes to continue to enjoy the so-called STAF exemption from any kinds of import measures, as they are not manufactured in Europe. However, a previous exemption granted for children’s footwear is likely to be cancelled, in spite of the fact that Siport, a major Italian specialist that licenses character children’s footwear under famous names such as Barbie, Fisher-Price, Hot Wheels and United Colors of Benetton had joined FESI to help lobby against the anti-dumping duties. Some members of FAIR had not been keen to get children’s shoes excluded, noting that this category is difficult to define: while some children wear size 41, some adult women wear size 36, for example.
The two exemptions have been applied to the provisional anti-dumping duties introduced by the European Commission last April, which started off at 4.8 percent for China and at 4.2 percent for Vietnam. They were set to grow gradually to 19.4 and 16.8 percent, respectively, but this system is likely to change. While Italian shoe producers found that these duty rates were insufficient to protect their industry, numerous other interest groups found these measures excessive.
According to numerous sources, it is likely now that the Commission will end up proposing the equivalent of a new quota system, restoring in effect the situation that existed before the Chinese import quotas were lifted at the end of 2004. Anti-dumping duties would be levied only on the quantities that will be imported above certain specific annual levels. This system of so-called «deferred duties» or «delayed duties» was going to apply only to Vietnam, but it now seems almost certain that it will affect China as well.
According to the sources, the maximum limits for this year or next will be set at 140 million pairs for China, or 68 percent of the non-technical leather footwear imported into the EU in 2005, and at 95 million pairs for Vietnam, corresponding to 79 percent of 2005 imports. If importers bring in additional footwear beyond these levels, they will be charged anti-dumping duties of 23 and 29.5 percent from these two respective sources. Officials of FESI and large retailers appear to support the principle of this form of protection, but ANCI holds the position that the quantities exempted from the anti-dumping duties are far too high. It would probably be satisfied if they were cut in half.
Representatives of Chinese shoe manufacturers have also responded negatively to the proposal, charging that such a system would be illegal under the rules of the World Trade Organization. Chinese authorities have shown some sympathy for a different system where the threshold would be represented by minimum import prices, but importers have obviously been hostile to this alternative. Among other things, they have pointed out that the acceptable minimum prices would differ immensely from one product category to the other.
Given the uncertainty over the future trade barriers, European shoe importers have not changed their pricing structure much, but many collections shown at the Expo Riva Schuh fair last month had less leather and more canvas, in an apparent effort to reduce costs. Material mix is the name of the game. A decline of about 5 percent from one year ago in the value of the U.S. dollar is helping to keep prices stable, although this has been partly offset by continued increases in the cost of energy and a variety of raw materials, including rubber.