EU Trade Commissioner Peter Mandelson

The European Commission has today adopted proposals by the European Trade Commissioner Peter Mandelson to impose a provisional anti-dumping duty on leather shoes from China and Vietnam. The measures follow a preliminary Commission investigation that has identified clear evidence of disguised subsidies and unfair state intervention to the leather footwear sector in China and Vietnam.

Last week only 3 Member States supported Mandelson's proposals. As the majority of States abstained in a vote, the Commission was able to press ahead with the action. 

The Trade Commissioner today reiterated his willingness to work with the Vietnamese and Chinese governments to address the questions of competitive distortions raised by the Commission’s investigation.

EU Trade Commissioner Peter Mandelson said: "These anti-dumping measures will correct the injury caused to European leather shoe producers. It is important that we act against unfair trade while encouraging legitimate and competitive from emerging economies. We do not target China and Vietnam’s natural competitive advantages, only unfair distortions of trade.”

In order to minimise any sudden impact on imports, the duties will be imposed progressively over a period of five months, beginning on April 7. They will rise to 16.8% for leather shoes from Vietnam and 19.4% for leather shoes from China - a duty sufficient to correct the injury caused to European producers by dumping. The provisional measures exclude children’s leather shoes so as to ensure that even the small price rises are not passed on to poorer families. Special Technology Advanced Footwear will also be excluded from the measures because there is not sufficient production of these shoes in Europe for injury to have occurred. A monitoring mechanism will be created to ensure that importers do not use these excluded categories to circumvent the duties.

Four things you need to know about the Commission’s provisional anti-dumping measures on leather shoes from China and Vietnam:

Mandelson says that the duties confront unfair trade practice, not China and Vietnam’s natural comparative advantage. Although the EU investigation was undertaken in factories jointly agreed with the Vietnamese and Chinese governments, EU investigators found clear evidence of serious state intervention in the leather footwear sector in China and Vietnam – cheap finance, tax holidays, non-market land rents, improper asset valuation and export incentives. There is dumping flowing from this state subsidisation. Legitimate low-cost comparative advantages common in developing countries are being topped up in this case with uncompetitive behaviour. The Commission will not act to protect European producers against tough but fair competition. It has a legal duty to act to limit the effects of unfair trade.

Because of our lesser duty principle, Europe’s anti-dumping rules clearly ensure that anti-dumping measures cannot be used to make imports more expensive than the equivalent EU product. EU duties either close the margin of dumping, which is the difference between the export price of the dumped product and its true value or close the margin of injury, which is the difference between the export price of the dumped item and the sales price for the equivalent EU product, whichever is less. This means they can and often do leave the competing export much cheaper than the European equivalent. This is not true of the rules used by the United States, China and others – nor do these countries take account of the wider public interest through a ‘Community interest-type’ rule. We can’t use anti-dumping procedures to stop tough but fair competition.

This case concerns just nine pairs of shoes from every 100 pairs bought by Europeans. A duty would add about 1.5 euro on average import prices of 8.5 euro for leather shoes that retail between 30-100 euros. Leather footwear import prices to the EU over the last five years have fallen by more than 20% but consumer prices have remained stable and even risen slightly. So the Commission believes that there is some margin within the supply chain to absorb a small duty on import costs by spreading it across product ranges and the distribution chain and the impact of measures on consumer prices will be minimal.

The shoes issue is not the textiles issue. The textile issue concerned fairly traded textile imports subject to a dramatic and sudden increase in volume.

For full details on the Commission’s anti-dumping measures on leather shoes from China and Vietnam please click here.