EU announces tariffs on Chinese and Vietnamese shoes 

Dumping

Evidence showed that the Chinese and Vietnamese shoe manufacturing sectors had benefited from state-backed cheap financing, non-market land rents, tax holidays and improper asset valuation. This allowed them to export shoes to the EU at a price lower than the market value proper competitive market circumstances would dictate – amounting to ‘dumping’.

The Commission estimates that the resulting tripling of imports from the two countries over the past four years has caused the closure of 1000 footwear companies, the loss of 40,000 jobs and a drop in production of 30%.

The EU is empowered to impose anti-dumping duties in such circumstances by the Anti-dumping Regulation of 1996, which implements World Trade Organisation (WTO) rules. The Commissioner’s recommendation has to be endorsed by the member states.

Exemptions

The Commissioner will recommend that childrens’ shoes and top-of-the-range special technology advanced footwear (STAF) (i.e. high-tech sports shoes) be exempted from the duties. He was unwilling to impose a possible burden in the way of higher prices on families with children and the number of STAF sport shoes manufactured in the EU was too small to warrant anti-dumping duties.

The staggered imposition of duties was set to take into account goods already in transit.

Impact of the measures

The Commissioner did not anticipate any or any significant increase in the price of shoes on the retail market. 

In the Commission’s estimation the duties will effect only 9 out of every 100 shoes sold in the EU and would amount to a sum of just €1.5 added to the average €8.5 wholesale price. Such shoes retail at between 30 and 100 euro. Since, in the view of the Commissioner, dumped wholesale prices had not, since 2001, been reflected in the retail price charged to consumers, there would be ample margin for importers and retailers to absorb any price increase.

Commissioner Mandelson stressed that these were not protectionist measures. China and Vietnam, he said, were free to exploit the natural competitive advantages of their cheaper labour market and other costs. However, they were not entitled to distort free trade through anti-competitive practices. "Defence against unfair trade is specifically sanctioned by the WTO. I do not use trade defence instruments lightly or casually," he said.

The Chinese government has reacted by saying that the Commission has insufficient evidence to back its claim that Chinese shoe exporters are dumping goods in the EU.

The Federation of European Sporting Goods Industry (FESI), however, was "seriously concerned" at the impact of the proposed measures. It said, "Consumers will end up paying the antidumping duty, as shoe prices will increase by 25%, with a negative impact on overall buying behaviour." 

The Confédération Européenne de L’Industrie de la Chaussure (CEC) felt that price increases were unlikely. What was more likely was "a decrease in the profit margin of importers of Chinese and Vietnamese footwear." In their view the measures are justified in view of the need to protect production and employment in the EU.

Eurocommerce and the consumer organisation BEUC also feel that the duties will lead to a rise in prices. BEUC Director Jim Murray said, "In the current case we fear that duties would be anti-competitive, anti-consumer and protectionist in the worst sense of that word."