BRUSSELS: European Union governments have refused to recognise that 13 Chinese shoemakers operate in market economy conditions, a move that will make it more difficult for them to prove that they are not selling footwear below cost.
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.
China is currently moving from a state-controlled economy in which the government set prices for most goods toward a market economy which allows competition between businesses to fix prices.
Individual companies can ask the EU to view their prices and costs as usual for a market economy.
Otherwise, the EU compares another shoe-producing country's production costs with China's to decide for itself whether China is dumping.
"There was overwhelming support for the proposal of the Commission not to grant market economy status to the 13 Chinese companies,'' EU spokesman Peter Power said Thursday.
"We will now proceed to the next phase in this investigation, which is to establish if dumping has taken place or not, has there been injury, is there a causal link between dumping and injury and then would measures be in the general interest of the European economy,'' he said.
Last month, eight Vietnamese shoemakers lost their bid for market economy status.
If the EU investigation - due to wind up by October - finds that duties are justified, it can keep them in place for up to five years.
The EU executive said Chinese shoe exports to Europe rose 700 percent in the first four months of 2005 as textile trade barriers tumbled, while prices fell 28 percent from the same period the year before.
The Federation of the European Sporting Goods Industry claimed these figures distorted the true picture, saying leather shoe imports rose 335 percent for the first 10 months of the year.
"It is the kind of natural growth rate to be expected with the lifting of quota restrictions,'' it said.
FESI members such as Adidas, Nike and Reebok import almost all their sports shoes from China and Vietnam.
Italian shoe exports slumped 15 percent by volume during the first quarter of 2005 , more than twice the decline in 2004.
Under World Trade Organization law, a complaint of market dumping must be brought by at least 25 percent of a particular industry.
High quality shoe importers including Ecco, Timberland and Hush Puppies said duties would add as much as euro20 (US$24) to the price of their shoes.
They wrote to the EU Commission asking it to exempt leather shoes retailing at more than euro50 (US$60) a pair.
"Imports of these mainly branded products have not significantly increased over the past year,'' they said. - AP
