01/13/2006, 00.00
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China and EU on the brink of trade war over shoes

The EU seems bent on imposing protectionist measures after accusing China dumping and of unfair trade practices. Beijing rejects the charges and threatens Brussels with lower imports from the EU.

Bruxelles (AsiaNews/Agencies) – China warned that it might seek arbitration at the World Trade Organisation if the European Union went ahead with its threat to impose anti-dumping tariffs on imports of Chinese shoes after three days of talks in Brussels with the EU failed to produce positive results.

Gao Hucheng, China's vice minister of commerce, said yesterday that the legal and factual arguments presented by Brussels for curbing Chinese shoe exports were "severely flawed''.

He added that Beijing was ready to defend itself before the WTO's dispute settlement body if necessary.

European shoemakers last summer charged that China and Vietnam were illegally dumping leather, sports and safety shoes on the European market.

On Wednesday EU Trade Commissioner Peter Mandelson said that "China has a responsibility to ensure that illegal dumping does not take place".

If the EU finds that anti-dumping duties are justified, it can impose them for up to five years. And it appears willing to do so.

However, according to Mr Gao, EU punitive tariffs would not only affect 1,257 Chinese shoe exporters, but would also hurt 478 European shoe companies, several European machinery suppliers, European leather producers that have US$ 600 million of annual exports to China.

What is more, some observers suggest that Beijing might also respond by reducing imports in other sectors.

"We have not caused material injury to European industry; on the other hand, we have provided a wider choice of footwear that are both inexpensive and of fine quality," Gao said.

The EU has countered saying that Chinese companies have flooded the shoe market. The volume of Italian shoe exports has slumped by 15 per cent during the first quarter of last year.

China noted that EU production was already falling before the lifting of quotas on Chinese shoe exports from 1.1 billion pairs in 1998 to 700 million pairs in 2004. Similarly, Beijing has charged the EU with using incomplete data and unsuccessfully trying to establish accurate trends over half a year of shoe exports, from January to July of last year, when Brussels launched its investigation.

Like many labour-intensive European manufacturing industries, shoemaking has gradually been shifted outside Western Europe to lower-wage economies elsewhere in Europe and in Asia long before 2005.

Beijing says duties could put 4 million Chinese jobs at risk. The Italian footwear association has said 900,000 jobs in Europe are at risk, a third of them in Italy.

Meanwhile, the EU yesterday refused applications from 13 Chinese companies for market economy status, which would have helped them counter dumping claims.

Chinese officials described the decision "as unacceptable and unprecedented". (PB)

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