Updated: 2006-01-14
Denying China's shoe-making industry the status of a fair competitor was wrong, industry officials said on Friday, adding that the European Commission's decision runs against the interest of the EU economy.

The European Union rejected on Thursday a request by Chinese shoemakers for market economy treatment in an anti-dumping case involving more than US$780 million.

The move will make it easier for the EU to impose high duties on imported shoes and escalate an already-simmering trade dispute.

The decision means that Chinese product prices will be compared to those of shoemakers in other countries such as Brazil, where production costs are higher than in China. Chinese exports would, therefore, be more likely to be liable for anti-dumping duties.

An official surnamed Wang from the China Chamber of Commerce's Division for the Import and Export of Light Industrial Products and Handicrafts said they had expected the result since the EU governments were under great pressure from Italy and Spain, which want to reduce imports from Asia.

"But it is still shocking that not a single one of the Chinese companies is given the market economy treatment," Wang said. "The EU absolutely ignored the fact that the industry in China is operating free of government control or support."

As the next step, Chinese footwear makers will try to prove that they have done no material harm to the European industry, Wang said.

To make its case for an anti-dumping charge, the EU has to show that enterprises have been selling products at prices lower than cost and that imports of Chinese shoes have harmed its domestic footwear industry.

Representatives of shoe brands such as Timberland and Wolverine met EU Commission officials immediately after the decision to express concern that anti-dumping duties would help local manufacturers at the expense of consumers and retailers.

"What would happen is that European industries that have adapted to the new world would be penalized," said Gerd Rahbek-Clemmensen, vice-president of Danish retailer Ecco.

"The fact is that if the EU rules in favour of the anti-dumping charge, most will be hurt," said Chen Guorong, president of Wenzhou-based Dongyi Shoes Co Ltd, which imports shoemaking machinery and materials from Europe.

China imports US$300 million worth of leather and US$50 million worth of shoemaking machinery from Europe annually.

The EU's decision to deny Chinese companies market economy treatment came after efforts by Chinese trade officials to stop the high duty rate.

Gao Hucheng, vice-minister of commerce, had a series of meetings with EU officials and industry representatives this week. He warned that raised duties on shoes could set a dangerous precedent that could damage Sino-European relations.

Europe dropped quotas on Chinese shoes at the start of 2005, and since then imports have surged.

Under its rules, the EU has until early April to impose temporary sanctions and until mid-October to set tariff increases that could stay in place until 2011. Imported shoes currently carry a tariff of less than 10 per cent.

Retail lobby groups said the decision would add up to 10 euros (US$12.05) to the price of a pair of shoes.