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This piece first published by Ohmynews on 2006-10-05 17:47 (KST)

Antidumping measures against China, Vietnam anger importers and retailers

Twenty-five European Union member states on Wednesday reached an agreement to impose an anti-dumping levy on shoe imports from China and Vietnam for two years.

Accordingly, 11 out of every 100 pair of Chinese and Vietnamese leather shoes in EU markets will face tariffs of 16.5 percent and 10 percent, respectively.

The new levy, which will take effect this Saturday, replaces the higher temporary one imposed since April. According to some trade experts, about 174 million pairs of shoes from China and 103 million pairs from Vietnam will subject to the new taxation.

According to EU trade officials, over the past five years, the number of shoes imported from China and Vietnam have risen dramatically in EU markets while the import prices fell sharply.

From 2001 to 2005, the quantity of shoes from China and Vietnam increased 1000 percent and 95 percent, while the import prices dropped 31 percent and 20 percent, respectively.

In 2005, about 1.25 billion pairs of shoes, half of the total sold in EU, were from China. Last year, Vietnam also exported 265 million pairs to the EU market.

EU members were deeply divided over measures to prevent cheap leather shoes from flooding EU markets. The European Commission accused China and Vietnam of breaking World Trade Organization rules by subsidizing shoe manufacturers and asked EU members to impose the anti-dumping levy. However, they could not reach an agreement on an earlier proposal to impose tariffs for up to five years due to the strong opposition from many state members, especially from retailers and importers.

Italy, a country with a well-known shoemaking industry, fears that cheap shoes from Asia could make hundreds of small businesses collapse and thousands workers in the industry unemployed. The view is shared by other members such as Spain, France, Poland, and Portugal.

But 13 other members, including Germany, Sweden, and the U.K., opposed the move, citing it as an unwelcome barrier to trade.

Earlier this year, the European Commission claimed there was "compelling evidence of serious state intervention in the leather footwear sector in China and Vietnam," and decided to impose temporary tariffs of 19.4 percent on leather shoes from China and 16.8 percent for those from Vietnam. The provisional tariffs expire on Oct. 7.

Over the past few months, there has been much arguing about whether or not to impose a permanent anti-dumping levy. Postponed once on Sept. 29, the vote was taken Wednesday at a meeting of permanent representatives of the 25 EU nations in Brussels.

Nine members said "yes" to the two-year measures, proposed by the France instead of 5 years, and 12 were against the tariff, while 4 countries abstained.

Under EU law, abstentions in this case mean "yes" since they do not oppose it. Therefore the proposal was adopted by the slightest margin of 13 to 12. EU interior and justice ministers will approve the measures at a meeting in Luxembourg on Thursday before they come into effect.

EU Trade Commissioner Peter Mandelson welcomed the decision. "It is very important that if we are going to stand up for free trade we keep in place defenses against unfair trade. The decision was a necessary one because it follows the investigation we made into claims of dumping," he said.

Italy sees the agreement as a victory even though it did not turn out the way they had expected. An official was quoted as saying, "This is not the ideal solution, but it is a good solution, which is heading in the right direction."

There hasn't been any official reaction from the governments of China and Vietnam, but it is predictable that it will be negative. Chinese and Vietnamese governments as well as shoe producers had strongly opposed the temporary tariffs, citing them as examples of sheer trade protectionism.

Moreover, children's shoes, which were not subject to the temporary anti-dumping duties, are now included in the new anti-dumping measures.

The move also angered importers and retailers within EU members, citing it as a "seriously disappointing day for advocates of free trade." In their opinion, the measures won't save any job in the shoemaking industry in the EU. It will just makes customers start looking for cheaper shoes from other low-cost countries like India and Sri Lanka. Of course, the measures will hurt the importers and retailers, and possibly customers as well.

In a joint statement on Tuesday, the European Consumers' Organization (BEUC) and Euro Commerce, which represents retailers and wholesalers in EU, stated, "With the latest round of anti-dumping duties likely to push up the price of imported leather shoes from China and Vietnam ... with a detrimental knock-on impact on the EU shoes market, low income families will be hit hardest. Some of Europe's producers are attempting to strangle trade reform to protect a few uncompetitive companies."