EU Shoe Tariff: Balancing Competing Interests
By: Ainsley Brown
There is nothing new with European Commission having to balance competing constituents – both market and geographic. The case remains the same with the anti-dumping duties put in place in 2006 to protect EU shoe manufacturers from cheaper Chinese and Vietnamese imports.
The EU will decide tomorrow if it will continue or end the duties on the cheaper Chinese and Vietnamese footwear imports. In 2006 the EU placed anti-dumping duties of up to 16.5% on certain classes of footwear from China and duties of up to 10% on certain classes of footwear from Vietnam after they were found to be being sold below cost of production. In October of last year the duties were further extended for another year pending review by the EU Trade Commissioner at the time, Lord Mandelson – now the UK’s First Secretary of State, Secretary of State for Business, Innovation & Skills.
Under the anti-dumping rules of the World Trade Organization (WTO), after a country has proven that goods are being dumped in its markets – being exported and sold below cost of production – that country has the right to impose duties on said goods. Anti-dumping duties however have limits and ought only to be as high as to bring the imports in line with the price of domestic goods. The dumped goods are an unfair competitive advantage for the imports and therefore represent a threat to domestic sectors. The anti-dumping duties act as shield against this unfair advantage, allowing domestic industries an opportunity to realign to new market realities. Well, so says trade law theory anyway but theory for an infinite number of reasons doesn’t always match up to practice.
One major reason for this dissonance between theory and practice is that trade is global and production often simply shifts somewhere else – a jurisdiction with no or perhaps lower anti-dumping duties on those particular goods. Additionally, and this is where the EU has to balance various constituencies, trade is global. Yes, I know, I already said that but it worth repeating because many companies, if not most, have to varying degrees global supply-production-distribution-promotion-sales chains that span the globe. European shoe companies are no exception.
