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Thu, Jan 12, 2006 - Page 12 News List

China warned by EU over dumping of leather goods

RESPONSIBILITY The EU trade commissioner told the economic powerhouse it must rein in any below-cost selling or be prepared to face the consequences

AP , BRUSSELS

EU Trade Commissioner Peter Mandelson warned China on Tuesday that it must crack down on businesses that may be exporting their goods to Europe below the cost of production.

"China has a responsibility to ensure that illegal dumping does not take place," Mandelson said after concluding a meeting with Gao Hucheng (高虎城), China's top trade negotiator.

The EU is investigating claims that imports of below-cost leather and sports shoes from China and Vietnam are undercutting European shoemakers, and could introduce extra charges on imports to protect the European industry.

"I will make any decision on the basis of a rigorous and careful consideration of all the relevant issues," Mandelson said.

The EU can impose provisional antidumping duties to protect the shoe industry anytime until April 7, even before it finds conclusive evidence that cheap Chinese leather shoes are breaking world trade law.

If its investigation -- due to finish in October -- finds that duties are justified, it can keep them in place for up to five years.

In general the highest percentage duties are levied only when severe cases of dumping have taken place.

A Chinese diplomat in Brussels told Dow Jones Newswires that China wants to resolve the issue amicably, but declined to comment on whether the government planned to take any action on companies that may be guilty of price dumping.

Beijing says such duties could put 4 million Chinese cobblers' jobs at risk.

European shoe manufacturers asked the Commission last year to bring in protectionist measures to keep them from going out of business.

Shoe imports to Europe surged by 700 percent during the first three months of last year as textile trade barriers came tumbling down. Italian shoe exports slumped 15 percent by volume during the first quarter, more than twice the decline in 2004.

The Italian footwear association ANCI said 900,000 jobs in Europe are at risk, a third of them in Italy.

Under WTO law, a complaint of market dumping must be brought by at least 25 percent of a particular industry. Italy, Spain and Portugal are home to more than 40 percent of European shoemakers.

Like many labor-intensive European manufacturing industries, shoemaking has gradually been shifted outside Europe to lower-wage economies over the last 20 years.

Trade relations between the EU and China threatened to sour earlier this year during a fight over the volumes of textiles China exports to Europe.

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