All kinds of rumors are circulating these days in Brussels about the outcome of the current anti-dumping investigations, adding to the uncertainty that has gripped old and new European importers of footwear from China and Vietnam since last June. Well-informed sources denied yesterday that the European Commission was considering the imposition of duties between 20 and 40 percent on the items being investigated, starting in early December.
As it turns out, no decision is expected on this hot issue until the investigators return in mid-October from the Far East and from Brazil, which has been chosen as the model country for comparisons in production costs. Sources say the final verdict will probably come through at the end of next month, for implementation anytime between November and February. The European Council of Ministers may decide at the same time whether it should impose mandatory labels of imports for shoes and other products.
There is a widespread notion that the anti-dumping duties will be issued, helping many European producers to do good business at the latest footwear shows. On the other hand, the difficult economic situation in Europe and is leading only a few European importers of shoes from China and Vietnam to revise their price lists upwards for their Spring/Summer 2006 collections, even though their effective purchase prices are rising. While the cost equation is reduced thanks to the persistently low level of the dollar and the fact that they don’t have to buy quotas anymore, it has been raised more recently by increases of 5-10 percent due to higher energy and labor costs for the producers and in shipment charges.
As a result, European importers are looking at other solutions to avoid a big cut in their margins. Some are trying to get the merchandise produced and sent to Europe as early as possible, before the duties are imposed. Others are looking for alternative production areas like Indonesia, working in some cases with Chinese producers who have facilities in those countries as well.
German shoe manufacturers, who rely a lot more than the Italians or the Spaniards on imports, said at the GDS earlier this week that it was harder than ever for them to map out their future development strategies because the import situation is right now as dark as the outcome of last Sunday’s elections.
According to the Federation of the German Footwear Industry (HDS), the ideal outcome of the current anti-dumping investigations would be for the European Commission to assess differential duties for individual Chinese and Vietnamese firms that would correspond with their proven level of dumping. Any blanket «punishment» of the industry in those countries or any other form of «extensive protectionism» would distort competition and hinder a needed structural change in Europe, said Philipp Urban, head of HDS, at a press conference in Düsseldorf last Sunday.
The German government and many others in the European Union are notoriously against any restrictions to trade. While acknowledging the need for fair trade, and calling for increased efforts to be successful in the Chinese and Asian markets, Urban noted that HDS did not participate in all the meetings held with other European industry associations on the anti-dumping issue. HDS, which is still not a full member of the European Confederation of the Shoe Industry (CEC), was only invited in the debate one or two days in advance of the substantive discussions.
Germany has not been spared from the recent surge in footwear imports from China, following the lifting of European quotas on Jan. 1. They jumped by 76.2 percent to 106.7 million pairs in the 1st half of 2005, offsetting decreases in imports from the rest of Asia. Overall, total footwear imports from Asia grew by 22.9 percent in volume.
Meanwhile, the new Brussels lobbies in favor of free trade are super-active. The European Branded Footwear Coalition (EBFC), which represents some major brands such as Clarks, Timberland and the brands of Wolverine World Wide, has criticized the current investigations, claiming that they don’t take into account fluctuations in exchange rates and elements such as the rising quality of the products made in China and Vietnam.
Both the EBCF and the Footwear Association of Importers and Retail Chains (FAIR) have told the European Commission in their arguments that any form of protection will ultimately raise the costs for importers, retailers and consumers, creating further problems at a moment where the European market is particularly weak.
Many large importers who were members of the older European Footwear Industry Organization (EFIO), such as Wortmann, have decided to join FAIR as well because EFIO was not doing much for them. Others, like Clarks, are members of EBCF and FAIR. With more than 60 members including Deichmann, Cortina, Brown Shoe Company, Skechers and others, FAIR claims to represent more than 30-40 percent of all the imports of footwear from the Far East, excluding the athletic shoes represented by FESI, the European Federation of the Sporting Goods Industry.
FESI continues to insist for the exemption of technical sports shoes from the current anti-dumping investigation into leather shoes from China and Vietnam, but no word has yet come from the European Commission in this regard. FESI’s argument specifies that the price of these shoes is relatively higher than that of the shoes made in the EU, and that investments made since the late 1980s in the production and sourcing of shoes and components in the Far East has made the current supply chain irreversible. It says that the current action could potentially send out a confusing message to Vietnam, which is in the process of joining the World Trade Organization.