Fabian Demicoli

ANTIDUMPING DUTIES ON CERTAIN IMPORTS OF FOOTWEAR WITH LEATHER UPPERS ORIGINATING FROM CHINA

The EU Commission has proposed that on the imports of footwear with leather uppers from China and Vietnam there be an ad valorum duty of 16.5% for the goods originating from China and 10% from Vietnam for all shoe sizes of this make. The company Golden Step in China has attained market economy status, and therefore imports there from are subject to 9.7% ad valorum duty.

The EU Commission has proposed that on the imports of footwear with leather uppers from China and Vietnam there be an ad valorum duty of 16.5% for the goods originating from China and 10% from Vietnam for all shoe sizes of this make. The company Golden Step in China has attained market economy status, and therefore imports there from are subject to 9.7% ad valorum duty.

Member states have agreed that there exists dumping however there are conflicting interests within the EU regarding this issue. Therefore the Commission has now come up with the above compromise. Italy, Spain, Portugal, Poland, France, Lithuania, Slovakia, Greece and Hungary are in favour of this ant-dumping measure.

GRTU’s recommendations on the 2nd August to the MFA have been as follows following consultation with Maltese members and Euro Commerce, the voice of commerce in Europe, of which she is an active member, and also taking into consideration that GRTU is in favour of free trade, namely:

· GRTU is against the proposed antidumping ad valorum duties as being proposed for the imports of footwear with leather uppers from China and Vietnam;

· The Commission have always been highlighting that the purpose of antidumping is to act against unfair trade practices, not to limit imports. If they mention the rise or decrease in shoe imports from outside the EU, they say that they do use antidumping in a political manner. But this is not in the interest of the EU and its member states, especially taking into consideration the Lisbon strategy;

· With particular reference to children’s’ shoes, in the framework of the community interest the Commission should also consider the impact of the proposed measures on consumers. If duties are imposed on shoes, they will hit poor families hardest;

The Commission’s reflection on adult shoes being prevented from being imported as children’s shoes, misses the point. Antidumping is not the instrument to regulate trade flows, i.e. to reduce the number of imported adult shoes.

Despite these recommendations by GRTU, Malta abstained and did not oppose the Commission’s proposal at a meeting of the Anti-Dumping Committee on 3rd August. In this context, abstention is equivalent to voting for the Commission’s proposal to impose duties.

GRTU had on earlier occasions clearly taken a stand against any form of protectionism and insisted on free trade. It insisted that:

· Sports footwear be excluded from any anti dumping measures. Decades ago the European sporting goods industry outsourced the production of sport footwear with no significant production remaining in Europe. (See http://www/fesi-sport.org/indexplugok.html). Should antidumping duties now be imposed, the economic impact on Europe would simply be a negative one as the footwear producers’ calculations would be completely jeopardized by the duties.

· Regarding children’s shoes, GRTU stated that due to the rate of growth, children need new shoes more often than adults. Anti-dumping duties on children’s’ shoes will therefore hit hardest poor families or families with low incomes. GRTU clearly emphasized that this factor needs to be considered in Malta’s interest as well as the Community’s interest.

Following consultation with Euro Commerce, the voice of commerce in Europe, GRTU stated that the Commission’s exporters and importers arguments against Brazil as an analogue country are regarded as not convincing. It is widely believed in Europe that Indonesia may be considered as the most appropriate analogue country.

The Consumers’ Association of Malta are also against any form of anti-dumping measures as being proposed by the Commission as it believes that such measures will not be in the interests of the consumers. Its arguments with the local authorities are:

· The shoes in question (average retail price 35 euro, according to the Commission) are bought mainly by poorer consumers. These consumers will be the most affected and will pay the higher prices that would follow the imposition of duties. Richer consumers do not normally buy these shoes.

· Similarly, the imposition of duties would impact disproportionately on consumers in those member states with below average GDP within the EU. In this case, the imposition of anti-dumping duties would have the same effect as a tax on people with low incomes. It should be noted that such measures may exert an upward pressure on inflation which is already very high and is threatening the introduction of the Euro in Malta.

· These shoes do not represent a real threat to shoe manufacturers in Europe, whose future lies in added value shoes and other footwear. The Commission seems to believe that these low value imports represent a threat to the likes of Gucci and Prada!

· In this (and in many other cases), the Commission has failed to give proper weight to the welfare of consumers when considering the “community interest”. There are serious flaws in the Commission’s analysis of this case, including the choice of country chosen for comparison purposes (Brazil), the selection of European and other companies to measure productivity and value, and the implied assumption that Chinese and Vietnamese imports are to blame for any and all problems facing European manufacturers.

· The ending of import quotas is sometimes cited as justification for anti-dumping duties. In fact, the European industry had ten years to prepare for the ending of quotas, which came as no surprise to anybody. Also, anti-dumping duties can legally be imposed only in certain clear and proven circumstances, and not as a response to every change in the market.

A last vote will be cast by the member states on Thursday 5th October 2006 in respect of the imposition of definitive antidumping duties on certain imports of footwear with leather uppers originating from China and Vietnam as from 7th October.

GRTU joins the Maltese Consumers’ Association, BEUC, the European consumer organisation, Euro Commerce and other EU consumers, retailers & importers against the proposed antidumping duties and has lobbied against it with the local concerned authorities for the last months.

GRTU rejects the imposition of definitive anti-dumping duties on shoe imports from China and Vietnam.

The protectionist measures proposed by the European Commission are neither in the interest of European consumers, retailers or importers, nor will they contribute to a better trade and investment climate between the EU and its Asian partners.

The imposition of antidumping duties inexorably leads to higher consumer prices, damaging especially low-income households across the EU, for whom clothing and footwear remain an important cost. In Malta it will lead to a higher rate of inflation because of the weighting on the RPI. There are no arguments in terms of local industry because there are no local manufacturing companies that produce the referred to products.

“Imposing higher prices on consumers by way of anti-dumping duties is inherently inefficient, even in a good cause” according to BEUC Director Jim Murray. “If approved, the duties on footwear will be anti-competitive, anti-consumer and protectionist in the worse sense of that word”.

“The introduction of antidumping duties would also be detrimental to the long-term economic growth. It would not solve any structural problem in European producing countries, have no positive impact on employment for European manufacturers and only have negative effects on society”, stated Xavier R. Durieu, Secretary General of Euro Commerce.

Smaller retailers and importers would be hit hardest by the proposed antidumping duties. Many importers have already ordered and paid their shoe imports months ago, but they are left in complete uncertainty as to the price of their imports after 7th October, especially the smaller companies with a narrow product range.

Interim reviews or a slightly shorter duration of the measures are not an acceptable solution, as they would not spare Europe the harmful effects described above.

GRTU and the Consumers’ Association call on the government to be strong in its opposition to this imposition at the EU front. This is a chance for Malta’s position to be counted. GRTU insists that Malta’s position today is to establish trading houses with capabilities to buy at low cost and to trade in the rest of Europe and the international market. This is especially the case where there is no local industry to protect.

The analysis of GDP statistics show very clearly that Maltese business is not benefiting of the internal market and further restrictions, as being proposed will further restrict Malta’s comparative trading advantage.

Action by the Malta government in favour of free trade and against the protectionist measures proposed by the Commission is essential and highly important to further Malta’s role in the European Union.

GRTU and the Consumers’ Association emphasize that Malta should have a clear staunch opposition stand on this issue to promote free trade which would also safeguard the interests of the consumer.

Euro Commerce represents the retail, wholesale and international trade sectors in Europe. Its membership includes over 100 commerce federations in 28 European countries, European and national associations representing specific branches of commerce and individual companies. Commerce is the closest link between industry and the 450 million consumers across Europe. It is also the largest consumer-related market service. It is a dynamic and labour-intensive sector, which plays a significant role in the European economy, generating 13 % of the EU’s GDP through 5.5 million companies. 95% of these are small enterprises, which are vital to Europe’s economic and employment prospects. The sector is a major source of employment creation, providing jobs for 27 million people from all sections of society and is one of the few sectors increasing employment.

www.eurocommerce.be
BEUC, the European Consumers` Organisation, is a Brussels-based federation representing 40 independent national consumer organisations from 29 European countries. Since 1962, its task has been to influence in the consumer interest the evolution of EU policy. It has today amongst its member’s consumer organisations from all (except one) new European Union member states.
www.beuc.org

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