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By
Reuters
Published
Oct 12, 2009
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EU Commission wants extended China shoe tax

By
Reuters
Published
Oct 12, 2009

By Darren Ennis

BRUSSELS, Oct 12 (Reuters) - The European Commission has proposed extending anti-dumping duties on EU imports of Chinese and Vietnamese shoes for at least 15 months in a compromise to appease Beijing and global shoemakers, a document showed.


Photo: AFP

"The anti-dumping measures on leather footwear should be maintained," the document obtained by Reuters on Monday 12 October said.

"The investigation showed that there is a likelihood of continuation of injury for the short/medium term, until the process of adjustment of the Community (EU) industry has been completed. The duration of the measures should therefore be limited to 15 months."

To try to avert another so-called "shoe war" with member states and further damaging already tense economic relations with China, the Commission -- which oversees EU trade policy -- has proposed the 15-month extension instead of the normal five-year term for what are known as "definitive duties".

The duties of 16.5 percent on Chinese shoes and 10 percent on those made in Vietnam must be approved by a majority of the EU's 27 governments, but most countries oppose extending the duties, diplomats involved in the case told Reuters.

"It's a big political gamble by the Commission, but they hope the 15 month compromise will win some supporters," one diplomat said.

Austria, Belgium, Britain, the Czech Republic, Cyprus, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands and Sweden still want the duties scrapped immediately, sending a positive message before the lucrative Christmas retail period, the EU diplomat said.

But major shoe-producing members Italy, Spain, France and Poland want to keep the duties.

INDUSTRY OPPOSITION

Companies and industry bodies affected by the proposal have been given until Nov. 3 to respond to the proposal before EU trade officials discuss the matter at a meeting of the bloc's antidumping committee later in November, before a full vote by ministers in December.

If approved by member states, the new duties would take effect from Jan. 3, 2010, much to the annoyance of large global footwear producers, major European retailers and consumers across the 27-nation bloc struggling to deal with the worst economic downturn in decades.

The EU first imposed duties for two years in 2006 after EU manufacturers accused the two governments of unfairly subsidising their low-cost shoe makers so that EU producers could not compete.

Brussels temporarily reimposed the tariffs last October pending a review, despite opposition from the majority of member states and the threat of legal action by Beijing at the World Trade Organisation.

The European Footwear Alliance, representing global brands such as Nike (NKE.N), Adidas (ADSG.DE) and Timberland oppose the decision to extend the duties.

Major retailers led by the British Retail Consortium including Tesco (TSCO.L) and Marks & Spencer (MKS.L), described the decision as farcical.

But the EU executive said in its document: "To conclude, based on the limited information available, there are no indications that the measures had a significant adverse effect on the financial situation of distributors/retailers during the period 2006 to date."

European consumer lobby BEUC also opposes extending the duties.

But Brussels said results of its review "demonstrate that consumer prices of leather shoes only increased slightly since the imposition of the measures ... lower than the reported inflation in that period".

"On the basis of the analysis of import prices ... from the information on the file, it does not appear that the measures have harmed consumers to a significant degree," the Commission document said. (Editing by Dale Hudson)

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