A festive pantomime is being played out at the European Commission row with regard to European Commission plans to extend anti-dumping duties against Chinese and Vietnamese shoes. The EU is deeply split over the issue with the number of states opposing the measure fluctuating by the day. Worryingly, East-West tensions have been increasing on both sides of the Atlantic and there is a concern that this may undermine the Doha Round of WTO negotiations.

Background

The EU imposed anti-dumping duties on Chinese and Vietnamese footwear manufacturers in 2006 in response to complaints that cheap footwear imports from the Far East were damaging EU manufacturers. The rates imposed are as high as 16.5% on Chinese products and 10% on Vietnamese products.

Opposition to and support for the extension

Fifteen Member States, including Austria, Belgium, the UK and Germany initially opposed extending the duties as did major sports and footwear manufacturers such as Nike, Adidas, Timberland and Diesel to name a few examples. Arguments against the duties range from:

• That they have failed to stem the tide of imports from the East and that although imports from the two countries involved have fallen, imports from countries such as Thailand and Indonesia have massively increased
• EU retailers are having their profits squeezed by the duties and;
• EU-manufactured footwear is not of the same quality as footwear from the Far East.

The Member States in favour of extending the measures are traditional manufacturers from within the EU- Italy, France, Spain and Poland produce more than 80% of footwear in the EU. They argue that:

• Cheap imports are fundamentally undermining and harming EU-based manufacturers, for example, Italy argues that in the first six-months of 2008, 143 shoe companies went out of business.
• The likelihood of continued damage in the short to mid-term was such that EU-based manufacturers should be given more time to recover from the global downturn.

However, recently it has been suggested that a number of member states that initially opposed the duties, including Austria, Germany and Malta will abstain from the upcoming vote and that the Commission will vote to extend the duties.

What happens next?

A vote will be held on December 22. A majority is required to extend or abolish the duties and trade experts are watching eagerly for the results of the vote. It is too close to call whether the Commission will vote to extend the duties though the early indications are that they will.

For more up-to-date International Trade developments visit our News section or alternatively sign up to our free Monthly Newsletter.