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Chinese shoe manufacturers are preparing for a final battle against the EU and its dumping charges before a primary ruling on penalties is made, to fight for favorable tariff rates.

 

Wu Zhenchang, board chairman with Chuangxin Footwear in Guangdong Province, said his firm was contacting other enterprises and collecting information to try and prove that they are not harming EU businesses.

 

The company, with seven other shoemakers, last month set up a coalition to counteract charges of dumping made by the EU.

 

The coalition has the support of about 130 domestic shoemakers.

 

Wu said the coalition would also urge the European Commission to reconsider giving market economy treatment to Chinese shoemakers.

 

An EU delegation will arrive on Friday to discuss issues concerning dumping, according to a source.

 

The EU delegation is scheduled to meet Chinese enterprises in Hangzhou in east China's Zhejiang Province, and will come to Beijing for talks with the Ministry of Commerce and industrial associations on Sunday.

 

Meanwhile, enterprises are also being urged to argue the substitute country issue. Since China is not recognized as a market economy, the EU has chosen a third country with which to compare Chinese companies' prices. In this shoemaking case, that third country is Brazil.

 

"It is unreasonable to take Brazil as a substitute country because its industrial structure is quite different and production costs are much higher," according to Su Chaoying, deputy director with China Leather Association. He added that he recommended using Indonesia as the substitute country.

 

Wu expects that a unified stand by the shoemakers' coalition could help to minimize the penalty duties to be imposed on some Chinese firms.

 

Last month EU Trade Commissioner Peter Mandelson recommended phasing in a 19.4 percent anti-dumping duty on Chinese shoes and 16.8 percent on Vietnamese footwear, over a six-month period.

 

"There is compelling evidence of serious state intervention on a large and strategic industrial scale," Mandelson told European media. "This state-supported dumping is causing serious injury to European industry."

 

His proposal is scheduled to be discussed at the Anti-dumping Committee meeting on Thursday.

 

If approved by a majority, the temporary tariffs will start at 4 percent in April and increase to the highest levels over six months. Children's shoes and high-tech sports shoes will be exempted.

 

Before coming up with the tariff proposal, the European Commission declined to give market economy treatment to 13 Chinese leather shoemakers that were investigated last autumn for dumping.

 

Fu Donghui, a senior legal expert with Allbright Law Office in Beijing, said the EU gave market economy treatment to several Chinese firms (not in the shoe sector) involved in other cases of dumping after 1997.

 

"We cannot believe that no company was given the treatment in this shoemaking case, since the footwear industry is one of the most market-oriented sectors in China," he said. "Moreover, we see the EU going backward with these dumping charges," he added.

 

Possible duties on Chinese footwear would be a big blow for Chinese players, as the EU is the second largest export market for Chinese enterprises.

 

The dumping charge has also been condemned by some EU and US footwear giants that operate plants in China, for they are likely to shoulder higher costs.

 

It would also mean that European consumers would end up paying more for their shoes. If shoe export prices increase by US$1 per pair, EU consumers would pay around US$1 billion more for footwear every year.

 

(China Daily March 7, 2006)