There is still no answer to the question of whether the European Union will keep the anti-dumping duties on non-athletic leather shoes imported from China and Vietnam that it imposed in October 2006 at the request of shoemakers in Italy, Spain, Portugal and a few other European countries that still produce them.
A majority of member governments represented on the anti-dumping committee of the European Commission voted against their extension last week, but as the Foreign Trade Association (FTA) has stated, the commission seems to be “desperate” to keep them in place for another 15 months, in spite of numerous objections by its opponents.
One of the opponents is the European Outdoor Group (EOG), which took a vote on the issue one and a half years ago. All the member companies of the EOG that market footwear called for the phase-out of the duties except for two unnamed companies, which abstained. Even those that continue to make some shoes in the EU have developed a balanced system of manufacturing whereby they source some footwear from Asia. Trail-running shoes are an example.
Fifteen out of the 27 EU governments voted last week against the commission’s initial proposal to extend the anti-dumping duties beyond Dec. 31. They were Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands, Sweden and the U.K.
All the other member countries supported the European Commission’s call for a 15-month extension of the duties except for Lithuania and Slovakia, which abstained.
The anti-dumping committee is only an advisory body, however, and the commission can overrule its opinion, as it did in 2006 when 12 of its members voted against the duties. It has been decided to go through a written procedure instead of public debate to decide what the commission will finally propose. The present commission is now expected to make such final proposal on Nov. 27 or Nov. 30, before the new commission is sworn into office and Benita Ferrero-Waldner of Austria takes over as trade commissioner from Lady Ashton of Britain, who is set to become the EU’s foreign minister.The final decision will be made by the European Council of Ministers, mostly likely on Dec. 22.
A lot of horse-trading is likely to take place between now and then among the member governments, so the final outcome is sure to be highly political. In the event that they go for an extension of the duties, the European Footwear Alliance (EFA), which represents important brands such as Adidas, Nike, Merrell and Timberland directly and through various associations, including the Federation of the European Sporting Goods Industry (Fesi) and EOG, has threatened to challenge the process by which the trade directorate of the European Commission determined dumping and injury to the European industry. The Chinese government may lodge a complaint with the World Trade Organization.
Both the FTA and the EFA noted that it took the commission less than 48 hours to respond to their observations. The FTA sent in a 36-page document listing 215 questions and arguments against the commission’s preliminary proposal. The EFA, which filed a 60-page critique, said the commission “has ignored serious factual errors in its findings and abandoned any semblance of due process.”
Lord Mandelson, the former EU trade commissioner who initiated the tariffs in 2006, went on record as saying that their extension would place Europe’s long-term relations with China and Vietnam at risk. Mandelson, who is now U.K. business secretary, said he expressed his “very great concern” to the present trade commissioner, Baroness Ashton.
The China Leather Industry Association said the anti-dumping duties have led to a drop of 20 percent in the volume of leather shoes sent to Europe and to the loss of 20,000 jobs in the country.
Criticizing what it defined as “a deeply flawed and politically motivated process,” the EFA noted that European businesses and consumers have paid more than €800 million in duties and higher shoe prices over the past three and a half years, and that the amount will soon grow to €1 billion. The EFA argues that the average wholesale price of a pair of shoes has risen by €1.50 because of the duties.
Independently of what the EU will decide, currencies will continue to have a major impact on the cost of imported footwear and on the importers’ margins, which have been found to be generally higher than those of the few European manufacturers canvassed by the commission. European importers continue to be blessed by the weak value of the dollar in sourcing their shoes from China and Vietnam. Meeting in Istanbul a few weeks ago, the member governments of the G7 officially asked China to raise the value of the yuan by 14 percent in order to establish a fair trade balance (more in our sister publication Shoe Intelligence).