EU and China square up for shoe battle

A China-EU trade crisis lurks around the corner after Brussels on Thursday (12 January) denied market-economy status to 13 Chinese footwear makers, clearing the way for EU anti-dumping duties on Chinese imports.

The move will make it harder for Chinese importers to argue they are selling goods at a true market price and not for less than the cost of manufacturing them, an accusation that was put forward by European shoemakers in summer last year.

Italian shoemakers in particular protested against shoe imports from Asia, claiming that China and Vietnam were illegally dumping leather, sports and safety shoes on the European market.

A spokesman for EU trade commissioner Peter Mandelson said on Thursday that there was "overwhelming support" from member states to withhold the free market status of the 13 Chinese companies.

"We will now proceed to the next phase in this investigation, which is to establish if dumping has taken place," he indicated.

If the European Commission deems that the Asian shoe giant is guilty of dumping it can impose duties for as long as five years.

The commission will decide in April whether to impose provisional anti-dumping duties and will say in October if it will prolong them to five years.

China immediately contested the EU move against the 13 companies, saying it might seek arbitration at the World Trade Organisation if the Brussels goes ahead with the anti-dumping tariffs.

Beijing claims the tarrifs would threaten 4 million jobs in China, media reports say.

"If badly handled, it would affect our economic and trade relationship and our confidence in the EU in terms of its commitment to free trade and its leadership of the WTO," a Chinese official told China Post.

Imports of Chinese leather shoes surged by 900 percent in the first five months of 2005 according to EU estimates, while consumer prices fell 28 percent.

Euobserver.com