The European Union canceled its quotas on shoe imports from China on January 1, 2005, as part of China’s accession to the World Trade Organization (WTO). But just over a year later, EU Trade Commissioner Peter Mandelson announced duties as high as 19.4 percent on some shoes made in China, and 16.8 percent on certain types from Viet Nam, criticizing the countries for “state-supported dumping.”
　　Shoes are the latest Chinese export category to raise accusations of dumping, though the Chinese Government argues that the criticisms and tariffs run counter to the notion of free trade. The EU currently has about 50 investigations ongoing into Chinese goods, on everything from strawberries to DVDs.
　　“Since China opened its doors to the world, the country has been making huge efforts in establishing a market economy. The Chinese Government feels the EU should understand their approach,” Vice Minister of Commerce Wei Jianguo said. He said China intends to hold consultations with EU representatives and seek a resolution to the latest dispute.
　　According to Mandelson, the EU has conducted an investigation into allegations of dumping of Chinese and Vietnamese shoes and found “compelling evidence” that there is “serious state intervention on a large and strategic industrial scale” in the footwear sector in those countries.
　　He recommended that a provisional duty be phased in, in four stages over six months, beginning at about 4 percent from April 7 to October 7, and will be definitive in the next five years. Mandelson said the measures are based on targets to minimize harm to European footwear importers whose products are manufactured in Asia and are currently en route to Europe.
　　I CAME TO CHINA AND ALL I GOT WAS…Chinese Minister of Commerce Bo Xilai (right) presents a made-in-China T-shirt to EU Trade Commissioner Peter Mandelson in Shanghai last June, after the two sides reach an agreement on the textile trade
　　Last July, the EU Council announced the EU would launch an anti-dumping investigation on part of made-in-China footwear, including leather shoes and sneakers, under pressure from shoemakers in Italy, France and Spain. The EU said that leather shoe imports from China increased by 320 percent to 950 million pairs in the year ending in March 2005, while those from Viet Nam jumped 700 percent to 120 million pairs.
　　Mandelson said that along with evidence of a flawed accounting practice, the EU had found what he called evidence of non-commercial loans or capital grants from the Chinese and Vietnamese governments to footwear producers, as well as inappropriate evaluations of assets, non-commercial rates for land use and tax breaks for footwear exporters in their countries.
　　
　　Chinese reaction
　　
　　The Chinese Ministry of Commerce immediately refuted Mandelson’s statements. Ministry Spokesman Chong Quan said there is no dumping in the footwear trade between China and the EU, according to the two sides’ agreement when China entered the WTO.
　　Chong said the EU’s recent eagerness to launch anti-dumping measures is based on obvious trade protectionism. “This move is against the principle of free trade, as well as disobeying the EU’s economic interests, because some EU countries are also opposed to the policy.”
　　He added that 98 percent of footwear enterprises in China are either private plants or foreign enterprises. Chang said the EU should do a more thorough investigation and analysis, so as to maintain the normal trade order with China.
　　Although children’s shoes and high-tech sports shoes are to be excluded from the tariffs, EU’s move is expected to cause big trouble for Chinese footwear makers.
　　FOOTWEAR CAPITAL: Wenzhou in east China’s Zhejiang Province is dubbed the “Kingdom of Footwear”
　　China now is the biggest footwear exporter in the world. The EU at present is China’s second biggest importer, as 14.6 percent of China’s shoe exports go to the EU. Statistics from Chinese Customs show that more than 805 million pairs of shoes, valued at $2.6 billion, were sold to the EU from January to October 2005.
　　However, a large number of them were from footwear producers who had never exported a single pair of shoes prior to January 1, 2005, the date the EU canceled its quotas.
　　If the EU’s anti-dumping measures are launched as scheduled, more than 20,000 footwear plants and 4 million workers are expected to be affected. Observers say that a trade dispute similar to last year’s textile fight could erupt.
　　Song Hong, an economist from the Chinese Academy of Social Sciences, suggested that Chinese footwear producers add more hi-tech elements to the shoe design and production, so as to increase the value of exported shoes and remain competitive. But Song said he thinks that even if the anti-dumping tariff is launched, its influence on China’s exports of footwear will be limited.
　　
　　Complaints from Europe
　　
　　Some EU members aren’t welcoming the EU Trade Commission’s anti-dumping measures against China and Viet Nam, saying the move will hurt the interests of footwear importers and retailers.
　　The anti-dumping tariff is reportedly splitting the European footwear industry. Traditional footwear producers in South and East European countries, such as Italy, France and Spain, are in support of the tariff, while North and West European footwear producers and merchants are opposed to the EU’s measures.
　　Industry analysts say EU consumers would be forced to shift to cheaper cloth or synthetic leather shoes from genuine leather ones if the duties were put into force. In the end, European consumers would be the ones to suffer from the anti-dumping duties.
　　The Swedish Government has cautioned the EU against adopting the measures. “It’s very old-fashioned to hit them with duties, and it is nothing other than protectionism,” Sweden’s Minister for Industry and Trade Thomas Ostros said. “The problem is that it affects consumers through higher prices.”
　　In a statement released in late February, two EU associations related to the shoe industry stated their opposition to the EU Trade Commission’s “trade protective measures.” The statement suggested that the average retail price of each pair of shoes could increase by at least 10 euros, which would be a great problem for European families with lower income.
　　The statement also claimed in countries in which footwear production takes place outside Europe, the anti-dumping tariff won’t benefit the country’s employment situation, but only serve to raise footwear prices.
　　Moreover, as the period of importing and selling a pair of shoes can be six to eight months, footwear importers and retailers will be the first to get hurt. That is, the price can be raised by at least 3 percent, and more than 10,000 people engaged in the sector will be jobless, the statement released by European traders and consumers claims.
　　“If evidence shows that China and Viet Nam are really against the anti-dumping laws, there are better ways to solve the problem, for example, indicting them to the WTO. But current measures will not help,” according to the statement.
　　Chinese officials have reportedly said they will take the issue to the WTO.

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