Asia-Pacific, Economy & Trade, Europe, Headlines

TRADE: EU Digs its Heels over Shoe Imports

Stefania Bianchi

BRUSSELS, Feb 21 2006 (IPS) - The European Union is on the brink of a shoe war with Asia as it considers imposing restrictions on imports of shoes from China and Vietnam.

The European Commission, the European Union’s executive body, says the bloc has evidence that Chinese and Vietnamese firms were illegally subsidising – or “dumping” – footwear sold in Europe last year.

Dumping is the sale of a product for export at less than its normal value in the market where it is produced.

The Commission argues that the Chinese and Vietnamese governments supported their shoe producers through tax breaks, cheap loans and other trade-distorting measures.

“There is compelling evidence of serious state intervention in the leather footwear sector in both these countries,” Commission trade spokesman Peter Power said Monday (Feb. 20).

“This involvement takes the form of cheap finance, non-market land rent, tax breaks and improper asset evaluation. There is evidence of dumping and injury,” he added.

Brussels opened the probe into shoes with leather uppers last July under pressure from European manufactures worried about a huge jump in Chinese and Vietnamese imports into the bloc.

Import of Chinese leather shoes into Europe rose by 320 percent over the year April 2004 to March 2005, with a total of 95 million pairs sold in the bloc. Over the same period, imports from Vietnam increased by 700 per cent to 120 million pairs.

If the EU decides to go ahead with anti-dumping measures, they could be applied as soon as Apr. 7 for six months, and could then become definitive for the next five years.

The move could lead to tariffs on imports from the two countries in a bid to protect the European shoe industry, but the Commission says it is too early to say what EU trade commissioner Peter Mandelson could propose.

Southern and central-eastern European countries with important domestic shoe productions such as Spain, Italy and Hungary are pressing for the duties to be imposed.

But the industry is split between organisations representing local shoemakers who talk about the threat to European industry, and other groups warning that tariffs would threaten Europe’s consumers and retailers, and its competitiveness.

Some shoe retailers are warning that anti-dumping duties would dramatically increase the price of shoes within the bloc.

The Federation of the European Sporting Goods Industry (FESI) says it is “seriously concerned” by the impact of such measures on Europe’s consumers. It says consumers will end up paying the anti-dumping duty, as shoe prices will increase by 25 percent with a “negative impact” on buying behaviour.

The organisation said it is pleased that the Commission’s proposals are currently limited to shoes with leather uppers, but it is warning that the measures could impact on the industry and consumers.

The European Confederation of the Footwear Industry, known as CEC, which represents all major national footwear federations of the European Union and also observing countries of Central and Eastern Europe, says it is important to stress “the overall Community interest for the adoption of appropriate anti-dumping measures.”

It says anti-dumping measures are in the interest of the EU and “will not create negative effects” such as increased prices, reduced employment or reduced choice for the consumer.

“From the arguments of the opponents to anti-dumping measures, it is clear that their aim is to create a doom scenario of negative effects for consumers, employment and the Community as a whole, which would be caused by measures favouring only a dead industry which has not been able to anticipate the challenges of a global economy,” CEC managing director Roeland Smets told IPS Tuesday.

“CEC renounces this false picture as well as the negative impacts and stresses the need to place facts into their real context and perspective,” he said.

CEC is urging the EU to impose high tariffs on China and Vietnam to curb the influx of shoes from the region.

“At the moment the European Commission is trying to please all sides involved in the discussion, but it needs to get its priorities right to support the European industry,” he added.

Such action by the EU is expected to spark tensions similar to last year’s trade battle over cheap Chinese textile imports, or the “bra war” as that dispute came to be called. Huge quantities of clothes and underwear items were blocked for weeks at European ports, with retailers claiming huge losses due to the standoff.

Any tariffs on shoes would have to be agreed by member states, which could happen as early as at the General Affairs Council meeting in Brussels Feb. 27.