The governments of the 25 member countries of the European Union were given this week one last chance to support the same proposal on anti-dumping measures against Chinese and Vietnamese leather shoes that they had rejected by a thin majority at the beginning of August. If there is no simple majority of governments backing the measures or abstaining on the issue in one of the next Councils of Ministers, the present provisional duties will expire on Oct. 6.
Government officials in Italy, France, Spain and Portugal have assured their respective trade associations that they will do their utmost to convince their counterparts in other governments – especially those that are still wavering – to support the measures. A total of 14 governments voted against them during the second week of August, but they were acting in an advisory role through a written procedure in the midst of the summer holidays, and two of them did not cast any votes.
As he had done on Aug. 3, European Trade Commissioner Peter Mandelson has again proposed to assess anti-dumping duties of 16.5 percent for China and 10 percent for Vietnam on top of the regular import duties, again exempting athletic shoes brought in under the so-called STAF definition and make an exception for one Chinese company, Golden Step, which would be charged an anti-dumping duty of 9.5 percent. Children’s shoes will not be excluded from the measures as Mandelson had proposed under a previous scheme, partly because it has been found that importers could bring in women’s shoes in small sizes labeled as children’s footwear.
Mandelson had submitted this to the anti-dumping committee of the European Commission last month on an advisory basis. A spokesman for Mandelson pointed out that this time the member states’ vote will be formal and legally binding, and that they may be asked to explain the legal rationale behind their votes. He recalled a case related to cotton fabrics where the European Council of Ministers was scolded by the European Court of Justice because it had not provided a legal justification for its rejection of certain import measures back in 1998.
Mandelson reiterated the fact that the Commission’s 15-month investigation had uncovered clear evidence of state intervention that resulted in dumping and injury for European producers. That includes cases of cheap financing, tax holidays, land rents below market value and improper valuation of assets. However, Paul Verrips, who represents the shoe importers’ interests through FAIR claimed that such forms of subsidies could not be regarded strictly as dumping, and that the EU has no legal obligation to act on dumping.
ANCI, the Italian shoe industry association, is optimistic at this stage about the passage of the anti-dumping duties, but the timing is not yet finally set. A working group of the Council of Ministers is almost certain to debate the issue once more on or around Sept. 13. A preliminary vote is expected at the subsequent meeting of COREPER, a committee of permanent representatives of the member states that usually takes place on Wednesdays. The Council will then have to endorse the measures, mostly likely around Sept. 20-23. A delegation from the Chinese government is scheduled to land in Brussels just around that time, and it will certainly put some pressure in its favor before the final act.
The new proposed anti-dumping duties are lower than peak rates that are being reached under the current provisional duties, which amount to 19.4 percent for China and 16.8 percent for Vietnam. The European Commission says the new rates have been assessed on the basis of a more detailed analysis of the findings of its 15-month investigation into the practices of Chinese and Vietnamese firms.
Mandelson’s spokesman added that, in setting the new duties, the Commission had weighed the potential costs of the measures to consumers, users, importers and retailers, in accordance with European rules on protection against dumping practices. He stressed that the Commission does not want to protect uncompetitive European producers, as numerous free market lobbyists have stated until now, but wants to create market conditions in which competitive advantages stemming from low labor costs and other elements could be exercized fairly. He said the EU would send out the signal that it would accept unfair competition and unfair trade if it were to tolerate dumping in any form.
The highly vocal British Retail Consortium, which has a lobbyist in Brussels, again warned that poor families and other consumers will be affected by these measures, calling on his and other liberalist governments to reject them in the consumers’ interest. It said the retailers’ already tight margins will come under further pressure.
The European Commission noted that only 11 percent of the shoes bought by European consumers will fall under the new regime and that there is a big difference already between the average import price of the shoes subject to its investigation, estimated at about €8.50 per pair, and their average retail price of about €35, with some branded models retailing for as much as €120. The duty on Chinese shoes would only add a cost of €1.40 to the average import price, the Commission noted, suggesting that importers and retailers could spread it easily through the value chain and across the full product range.
The EU member governments previously rejected an alternative proposal to set up a new quota system, setting an annual floor of 140 million pairs of leather shoes imported from China and 95 million pairs for Vietnam, under which no anti-dumping duties would be charged. China and Vietnam exported a total of 1.25 billion and 265 million pairs to the EU, respectively, during 2005. If they had been enforced already last year, the proposed new regulations would have applied to only 174 million pairs imported from China and 103 million pairs imported from Vietnam.
The Commission again stressed that there has been serious evidence of injury to the European industry, whose production has fallen by 30 percent since 2001, leading to the loss of some 40,000 jobs. Imports of Chinese leather shoes have risen by 1,000 percent over the period, and those of Vietnamese leather shoes by 100 percent. Their average unit price has decreased by 27 percent, but the European Sporting Goods Industry Federation (FESI) points out that this has occurred mainly because of the decline in the value of the U.S. dollar.