The anti-dumping committee of the European Commission met yesterday to present the results of an investigation into the dumping of leather shoes from China and Vietnam, which has taken longer than expected. Another meeting is scheduled for Dec. 15, but because of the complexity of the case and intense lobbying on all sides, no final decision was made yesterday and none is likely to be made before next January. However, it is fairly certain by now that European authorities will decide to impose some form of protection for European producers. The form and the scope are wide open to speculation, indicating that the final decision will be highly political.
Many rumors have been circulating in Brussels over the last few days. Reportedly, one possibility is that the European Union will end up re-establishing the import quotas that it had lifted last Jan. 1 on certain categories of leather shoes coming from China. This type of safeguard measure will become possible under the rules of the World Trade Organization as of next year, considering that there has been a surge in the imports previously under quota, and that it has caused a certain “market disruption.” It is not sure, however, whether this sort of quantitative restrictions will be negotiated with China in the same way as the European Commission has done earlier this year for certain types of clothing and textiles, considering that it drew a lot of criticism, and whether it will be made applicable to shoe imports from Vietnam as well.
Anti-dumping duties are the other option for shoe imports from both countries, but it’s still too early to tell how high they will then be. According to well-informed sources, the investigators have found dumping levels as high as 30-40 percent on certain products. However, reports from Brussels indicate that the final anti-dumping duties will be about one-fourth lower because the actual level of injury is less. It is not sure whether there will be a differential treatment for the items imported from certain producers, as demanded by the German shoe industry.
It is possible also that there will be a combination of quotas and anti-dumping duties. The Confederation of the European Shoe Industry (CEC) has been insisting for anti-dumping duties in any case, judging that there has been unfair competition from China in terms of pricing, and that it has damaged numerous producers, particularly in Italy, Spain and Portugal. Other governments have expressed concern about the impact of anti-dumping duties on the prices charged to consumers, but their proponents are stressing that the margin between the f.o.b. price of the goods coming from China and Vietnam and the price of the same items sold in European stores is wide, indicating that it should be possible for the retailers to absorb the impact of the duties.
What seems fairly certain is that no decision will be made on the issue at the European Council of Ministers scheduled for Dec. 15-16, which will probably concentrate on more pressing problems related to the Doha round of multilateral trade negotiations. Any decision will be most likely put off until January 2006, and it will by influenced by political factors. Fortunately for importers, it will likely be enforced only after the bulk of shipments of the Spring 2006 collections is terminated, but it is not sure whether it will be made in time to decide on the price lists for Fall/Winter 2006 merchandise. The European Commission is entitled to wait until next April for the start-up of the final anti-dumping duties, although it can impose provisional duties before that date.
One of the pending questions is whether sports shoes with a special cushioning technology will be included or not in these measures. The leadership of the European Sporting Goods Industry Federation (FESI) recently met European Trade Commissioner Peter Mandelson to press the case for their exemption, but it apparently failed to get a straight answer. These so-called STAF shoes were not included in the previous EU quotas on Chinese shoes, and sources within the Vietnamese Trade Ministry were quoted a few days ago as saying that they will not be subject to anti-dumping duties. On the other hand, FAIR, the new association of European shoe importers, has asked for a broader interpretation of STAF shoes, including sneakers with EVA insoles and other technical features that are not meant for practicing any sports.
Rossano Soldini, chairman of the Italian Shoe Industry Association (ANCI), who had a word with Mandelson at a recent meeting of the Aspen Institute, found his attitude to be “evasive” and indicative of the fact that the EU is more interested in preserving the interests of retailers and importers than those of the shoe companies operating in Europe and their workers.
ANCI says the situation of the Italian and European footwear industry is “worsening day by day,” noting that, according to its own data, Italian production of the leather shoes previously covered by the Chinese quotas fell by more than 15 percent in the first six months of 2005. As reported, the volume of imports of these categories of shoes from China into the EU rose by an average of 525 percent in the first seven months of this year, and their average price plummeted by 27 percent.
Employment in the Italian shoe industry is at an all-time low level. A well-known producer in the region of Tuscany, Martini Osvaldo, recently went into liquidation, closing a factory that was employing nearly 100 workers. On the other hand, officials of ANCI noted that several other leading Italian companies experienced increases in orders at last September’s MICAM fair, partly due to the strengthening dollar and to the uncertainties surrounding the trade issues with China and Vietnam.
Anyhow, ANCI’s officials are confident that the European Commission will finally approve proposals for mandatory labels of origin on imported shoes at a meeting scheduled for Dec. 9, after numerous delays. If it does so, the EU Council will almost certainly endorse this measure on Dec. 15-16.