In a statement made on March 12, EU Commissioner for Trade Peter Mandelson has defended his proposal to impose anti-dumping duties on Chinese and Vietnamese footwear imports.

He stated, If the European Union moves next month, as I have proposed it should, to impose anti-dumping duties on some leather shoe imports from China and Vietnam, the European Commission is likely to be criticised from two sides. European leather shoe producers, faced with extraordinarily tough competition from Asia will demand higher tariffs and wider action. European Importers and retailers, who are currently benefiting from cheap state-subsidised leather shoes from China and Vietnam will accuse the Commission of trying to protect European industry and passing on higher costs to consumers.

Although our investigation was based on factories nominated by the Vietnamese and Chinese governments themselves, there is compelling evidence of unfair state intervention and disguised subsidies in the footwear sector in China and Vietnam. Along with evidence of substantially flawed accounting practice, we have clear evidence of non-commercial loans or capital grants from the state to producers; improper evaluation of assets; non-commercial rates for land-use and important tax breaks.

There is clear evidence that this intervention is allowing Chinese and Vietnamese leather shoe producers to sell their products on the European market at below their true value in China or Vietnam. That is dumping, and under WTO and EU rules we have an obligation and a right to combat it where it harms EU industry.

There is clear evidence that this state-supported dumping is causing serious injury to European industry. Since 2001, European leather footwear production has contracted by about 30%. Some 40,000 jobs in the sector have been lost in the sector. Import prices have fallen by about 30%. All this closely tracks the rise in unacceptably under-priced imports from China and Vietnam.

Intense competitive pressure on European footwear producers is not related solely to dumped goods. China and Vietnam have natural low cost advantages in labour and manufacturing. The Commission is not arguing that this competition is unfair because wages are lower in China and Vietnam than they are in Europe. That may be tough competition - but it is fair competition. Unfair competition is when markets are rigged and disguised subsidies are freely made available. That is what we have found. These companies are taking their legitimate low-cost advantage and topping it up with unfair behaviour.

That is why I have recommended provisional duties of between 16 and 20% on these imports. I have taken the step of recommending that this duty be phased in over a period of five months, beginning at about 4% in April. This will ensure that retailers with goods in transit are not suddenly faced with an unexpected cost at the border. It means importers can plan ahead over the next six months with the maximum of transparency and predictability. It nevertheless means that after six months a full duty will be in place and the damaging effects of dumping will be counteracted.

I have made it clear that we are open to work with the Chinese and Vietnamese in the interim to address the concerns raised by our investigation.”