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EU faces new standoff with China over shoes
(International Herald Tribune)
Updated: 2006-02-21 09:20
http://www.iht.com/articles/2006/02/20/business/tariff.php
After
a battle last summer over textile imports, the European Union faces a
potentially tense new trade standoff after it accused China and Vietnam on
Monday of dumping cheap shoes on European markets and prepared to impose tariffs
to protect European producers.
The move to impose tariffs on surging
imports of footwear could inflame trade tensions between the EU and China. But
Peter Mandelson, the EU trade commissioner, faces a delicate task: reconciling
calls from protectionist-minded countries like Italy to coddle home-grown
industries, while preventing a rerun of the embarrassing pile-up of women's
undergarments at European ports the last time the EU got tough on cheap
clothes.
"Mandelson hates this situation," said Emma Ormand, an
international trade consultant at PricewaterhouseCoopers in London. "He got
caned in the bra wars and he absolutely does not want a 'Bra Wars 2,'" she said.
Mandelson, she noted, is trying to seek a compromise that balances free trade
with European political realities.
The anti-dumping duties could be
phased in from April 7, two days before a general election in Italy, where
competition between domestic clothing makers and their Asian rivals is a
political issue.
Peter Power, a spokesman for Mandelson, said on Monday
that an investigation showed the need for the EU to take some form of
protectionist measures. Imports of leather shoes to the EU from China amounted
to 95 million pairs in the 11 months ended March 2005. Over the same period,
imports to the EU from Vietnam totaled 120 million pairs.
Commission
officials said Monday that they were still calculating the scale of the increase
for Vietnam. But they said figures for imports from China rose 300 percent from
January to October 2005, compared with the like period in 2004.
Power
said the Asian manufacturers were able to produce cheap shoes in such large
numbers because of state support including "cheap finance, nonmarket land rent,
tax breaks and improper asset valuation." EU officials had concluded that there
was "evidence of dumping and injury," Power added.
But even as he
prepares measures against the Asian imports, Mandelson also is taking steps to
avoid a repeat of what happened in 2005, and to mollify China at a time when
governments in Europe and the United States are seeking to persuade China to do
more to stop piracy of music, movies and luxury goods.
Under the EU
suggestions, if a majority of member state governments agree, tariffs could
start as low as about 4 percent by early April. That temporary level could rise
to just below 20 percent by early October. But Mandelson also would aim to
ratchet any duties lower if China and Vietnam later show signs of making
changes.
Rather than impose quotas, which the EU used last year in a
protracted battle with China over imports of undergarments, officials seem
likely to avoid measures that would limit the freedom of retailers to meet their
import needs. Any measures in this case would leave the actual amounts of
imports untouched.
Horst Widmann, the president of the Federation of the
European Sporting Goods Industry, which includes Adidas and Timberland among its
members, called measures to exclude athletic footwear from tariffs a step in the
right direction. Mandelson is "making a genuine effort to minimize the harmful
effects of antidumping," said Horst Widmann, the president of the Brussels-based
group.
But Widmann warned that about a quarter of all leather footwear
imported by the European sporting goods industry would still be affected by the
proposed antidumping measures, leaving consumers paying higher prices and
threatening the health of the retail sector and hurting the European
economy.
EU officials have contested claims of massive price increases,
saying that the possible duties could increase the cost to consumers by less
than ？, or $1.20, on a pair of shoes that cost ？5 or more.
To meet an
April 7 deadline, Mandelson must send proposals to EU member states this week or
next. Brussels insiders said a decision - requiring a simple majority - could be
taken in mid-March.
But Mandelson still could face a hard sell to get
through a compromise arrangement.
Ormand of PricewaterhouseCoopers said
an "unholy alliance" of countries like Italy, which want greater protection, and
countries in Scandinavia, which look askance at tariff plans, could be a deal
breaker.
"This is not a done deal," she said. "There are clear risks for
Mandelson because if his plan falls through he could be seen as failing to do
anything to protect the Italian manufacturers."
Mandelson traveled to
Milan and Rome in recent weeks to meet with Italian industry chiefs and
government officials in a bid to temper their desire for punitive duties of as
much as 100 percent. But there are signs of continued dissatisfaction. Italian
shoemakers are unhappy that Mandelson planned to exclude sports shoes from the
antidumping measures and are complaining that the duties will be too
low.
"This proposal is not satisfactory," Leonardo Soana, a director with
the Italian National Shoemakers Association, told Reuters. "The Italian industry
has been waiting for months for measures to slow the imports of Chinese
footwear," Soana said.
Mandelson will resume contacts in the next few
days, including with the chiefs of the Italian industry lobby Confindustria. In
those meetings, Mandelson is likely to remind Italian business leaders that the
future of Europe is ever-more open markets and that the region should embrace,
rather than reject, the benefits of a free and open global economy.
That
view was supported on Monday by Robert Sturdy, a spokesman on trade issues for
British Conservatives in the European Parliament, who warned that the
introduction of trade restrictions could weaken the European case for opening up
markets in developing countries to goods from wealthier countries during the
continuing round of global trade talks that began in Doha in 2001.
"We
must accept that Asian countries make cheaper shoes than we can in Europe and
find ways for European and Asian businesses to work together rather than just
impose barriers," Sturdy said.
"The 'Bra Wars' saga showed what happens
when the EU gets it wrong and Commissioner Mandelson shouldn't allow himself to
be influenced by a bunch of Mediterranean cobblers," he said.
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