The two countries stand charged with selling shoes below cost. China has threatened to retaliate. Concern is rising for European traders and consumers.
Brussels (AsiaNews/Agencies) As from 7 April, the European Union may impose a 20% tax on importation of shoes from China and Vietnam to prevent below-cost sales. The conclusion was reached by Peter Mandelson, EU Trade Commissioner.
The move for a time span of six months and affecting 8% of footwear, including tennis shoes and stiletto-heeled boots will be submitted to the so-called Anti-dumping Commission on 9 March. EU trade spokesman, Peter Power, told a press conference yesterday that there was "clear evidence" that firms in China and Vietnam were selling shoes below cost, a charge refuted by those implicated. Below-cost sales were encouraged by aid from the two governments to firms in the sector, he said, like "cheap finance, non-market land rents, tax breaks and improper asset evaluation".
China has threatened trade reprisals but all parties are willing to discuss the problem.
"To resolve the controversy, China could offer to limit its exports," said Mei Xinyu, expert in China's Commerce Ministry.
Last month, China's deputy Commerce Minister, Gao Hucheng, warned that Beijing may invoke the arbitration of the World Trade Organisation in the face of allegedly "illegal" duties. International free trade agreements allow for the imposition of duties, for a limited period, in cases of unfair competition like below-cost sale of goods.
European firms, especially Italian ones, have called for EU intervention, while importers fear an increase in prices and loss of jobs in the trade sector.
Many large producers are however against the move: last month they asked Mandelson to exempt shoes costing less than 50 euros a pair from taxation. "These measures are against the interests of the European economy," said Horst Widmann, president of the Federation of the European Sporting Goods Industry.
"This is a very consumer-hostile measure and would be particularly burdensome to low-income families as well as traders," said Ralph Kamphoener, senior trade adviser at EuroCommerce. The price of a pair of shoes, according to traders' estimates, could increase by between five to 20 euros.
The EU is divided, because countries without a large shoe industry do not want more duties. Bendt Bendtsen, Danish economics minister, said the cost to consumers of more expensive Asian shoes could be almost 10 times greater than the economic benefit for European shoe producers.
In 2005, the EU imported 120 million pairs of shoes from Vietnam and 950 million from China, at an estimated worth of five billion euros (six billion US dollars). Two-thirds of shoes exported from Hanoi go to the 25 EU states. Power said that within a year, the importation of Chinese and Vietnamese shoes to Europe increased by 320% and 700% respectively. European production, on the other hand, dropped by 19% from 1995 to 2003.