China-EU Footwear Dispute Deepens

09 July 2010

We reported in December that the EU had decided to extend existing anti-dumping duties (ADD) on Chinese and Vietnamese footwear for an additional 15 months.

China subsequently initiated WTO dispute proceedings in February by requesting consultations on the matter with the EU but despite months of negotiations the case has now gone to adjudication. Interestingly though, Vietnam has not yet brought proceedings to the WTO but the ADD on Vietnamese imports is lower than its Chinese counterparts.

Background

The original ADD was introduced in February 2006 as the EU claimed that cheap imports from the Far East were damaging European Industry. In December 2009, the original ADD was extended by 15 months despite initial internal opposition from certain Member States and from the European Footwear Alliance (which represents brands such as Adidas, Ecco and Timberland) which has argued that the extra duties and consequently higher prices hurt European businesses and consumers. In March of this year, a branch of the ECJ ruled against Chinese footwear companies seeking the removal of ADD ordering the companies to pay their own and the EU’s legal costs.

What is China’s argument?

China argues that the EU used “inappropriate” measures to work out the dumping margin and the consequent value of duties. It also argues that the EU has not taken account of factors such as changing consumer patterns, the removal of an import quota on Chinese footwear, shifts in demand and exchange rate fluctuations.

Worsening trade ties?

There are a number of EU-China disputes at present. For example, Brussels has initiated WTO dispute proceedings against ADD levied by China on EU “steel fasteners” (screws, nuts and bolts etc). The duties cover EU exports worth EUR 140m last year. Last year China launched also launched a WTO dispute against the EU’s ADD on Chinese “steel fasteners”- that case is now in the process of adjudication.

 

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