China hopes for solution to EU shoes spat
(Reuters/Bloomberg)
Updated: 2006-02-21 18:58

The European Union will impose import duties as high as 20 percent on some leather shoes from China and Vietnam starting in April, to prevent the footwear from being sold below cost on the bloc's markets.

The EU, which last year imported 120 million pairs of shoes from Vietnam and 95 million pairs from China worth 5 billion euros ($6 billion), said it will impose rising tariffs over six months, to a maximum of almost 20 percent of their value. China has threatened to retaliate if the European Trade Commissioner Peter Mandelson levies the additional duties.

"This is a very consumer-hostile measure and would be particularly burdensome to low-income families as well as traders, importers and retailers," said Ralph Kamphoener, senior trade adviser at EuroCommerce, which represents European companies that employ more than 22 million people in the EU.

The EU's proposal adds to a series of disputes with China over textile and apparel imports and piracy of copyrights, trademarks and patents. China's emergence as an industrial economy has also provoked tensions in the U.S., prompting calls from lawmakers and the administration of President George W. Bush for a revaluation of the yuan.

By phasing in the penalties from April 7, the European Commission, the bloc's executive agency, hopes to avoid the kind of distribution blockages that occurred when the EU limited imports of Chinese textiles last year. The categories under investigation range from tennis shoes to stiletto boots covering 8 percent of all shoes sold in Europe.

Possible Solutions

"China's offer may be to limit exports as a possible resolution to this dispute," said Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Cooperation with the Ministry of Commerce in Beijing. The Chinese government may either impose an export tariff to slow shipments or a cap on exports, Mei said. "What the government may offer will depend on talks to come with the EU," he said.

Commission spokesman Peter Power said there is "compelling evidence of serious state intervention in the leather footwear sector" in both China and Vietnam. That intervention takes the form of "cheap finance, non-market land rent, tax breaks and improper asset valuation leading to dumping," he told journalists in Brussels on Monday, adding that "there's evidence of both dumping and injury."

Mandelson will propose the punitive duties to the EU's anti-dumping committee on March 9.

Exports Climb

China's clothing and textile exports increased 21 percent to $115 billion in 2004, China Textile News reported last week, citing customs data. Foreign sales of footwear, Vietnam's third- biggest export in 2005, rose 7 percent in January from a year earlier to $300 million, with the 25-nation EU as the top destination, accounting for two-thirds of its exports.

Companies including Adidas-Salomon AG, Puma AG and Clarks Ltd. have voiced opposition to higher footwear duties. A group representing importers of brands including Timberland, Kickers, Rockport and Ellesse last month urged Mandelson to exempt shoes costing more than 50 euros a pair from any extra duties.

Brussels-based EuroCommerce estimates the duties will boost the price of a pair of shoes by between 5 euros and 20 euros. The commission said the average import price for shoes under investigation is 8.50 euros and the average retail price 35 euros and that there are ``margins within the supply chain to absorb a small additional import duty.''