EU Asian Leather Shoe Anti Dumping Investigation'

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EU - Asian Leather Shoe Anti- Dumping
Investigation.

• Moyra Cassidy
• Leonard Cheiaua
• Yungcheng Chang

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Background

• In March 2006 The EU Commission adopted new
  Antidumping provisions against China and Vietnam
• EU is imposing anti-dumping duties on imports of
  leather shoes from China Vietnam.
• The European Commission placed a 16.5 tariff on
  leather shoe imports from China and 10 on
  Vietnam (Oct 7, 2006).
• This is intended to be a two-year anti-dumping
  regime.

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What type of Shoes are affected

• The tariff is targeting only leather shoes. The
  majority of other types of footwear such as
  sneakers are excluded.

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What is the complaint?

• Following a complaint lodged by the EU footwear
  industry, the EU Trade Commission opened two
  Anti-Dumping investigations on footwear
• one on leather footwear from China and Vietnam
  and
• the other on safety shoes from China and India.
• The current status of the case is in
  Investigation-Negotiation stage between the
  countries involved. The case has not gone through
  the formal DSB process yet.
• Several members of the EU opposed the tariff,
  especially the UK and Sweden.

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Who are the parties?

• China/Vietnam
• Government
• Leather shoe industry
• European Unions
• EU footwear industry (ie EU Producers)
• European Union (support the decision)
• Italy, Spain, and France
• European Union (opposed the decision)
• UK and Sweden

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Key Players

• Some members of EU Footwear Industry
• E.U. Politicians (Pro Local Producers)
• E.U. Trade Commission
• Asian Leather Shoes Producers
• Asian Politician (Local Govts)
• WTO

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EU-leather shoes Key Data

• Overall EU shoe market 2005 2.5 billion pairs
• Leather Shoes as of total EU shoe market 35
• Products covered by measures as of total EU
  shoe market 9

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Chinese leather shoes Key Data

• Overall China shoe imports to EU 2005 1.25
  billion pairs.
• China exports 2005, shoes subject to
  investigation 206 million pairs.
• China exports 2005, shoes covered by measures
  145 million pairs

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Vietnamese leather shoes- Key Data

• Overall Vietnam shoe imports to EU 2005 265
  million pairs.
• Vietnam exports 2005, shoes subject to
  investigation 119 million pairs.
• Vietnam exports 2005, shoes covered by measures
  80 million pairs

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Chinese/Vietnamese leather shoes- Key Data

• Increase in Chinese leather shoe exports to EU
  2004-2005 450,Increase in Chinese leather
  shoe exports to EU 2001-20051000
• Increase in Vietnamese leather shoe imports to EU
  2004-2005-1 (largely due to competition from
  China )Increase in Vietnamese leather shoe
  2001-2005 95
• Fall in average unit price for Chinese/Vietnamese
  leather shoes 2001-2005 China -32 Vietnam
  -20 average -28
• Consumer prices for Chinese/Vietnamese leather
  shoes have remained stable or risen slightly
  2001-2005.

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EU Commission

• The EU preliminary investigation has identified
• Evidence of disguised subsidies
• and unfair State intervention to the leather foot
  wear sector in China and Vietnam
• The EU commission wants to work with China and
  Vietnam to address the competitive distortions
  raised by the investigation.

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EU Commission

• EU Commission believes their antidumping measure
  (duties/tariffs) will correct damages caused to
  the EU leather shoe producers.

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EU Commissions Argument

• Confront unfair trade practice, not China and
  Vietnams natural comparative advantage.
• EU anti-dumping rules clearly ensure that
  anti-dumping measure cannot be used to make
  product more expensive than the equivalent EU
  product
• According to EU, this case concerns just 9 pairs
  of shoes from every 100 pairs bought by Europeans
  
• The shoe is not a textile shoe and EU wants to
  make it clear that they are not suggesting that
  Chines textile exports are unfair
• This is not a Protectionist measure

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EU Commission Preliminary Investigation.

• Found evidence of State intervention-cheap
  finance, tax holidays, non-market land rents,
  improper asset valuation and export incentives.
  Uncompetitive Behavior
• EU duties would close the margin of dumping and
  thus allowing EU producers to remain competitive.
  
• The duty would add about 1.5 Euro on average
  import price, and may add 8.5 Euro retail
  increase on shoes that retail between 30-100
  Euros.

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Evidence Continued.

• Clear evidence of State intervention
• State intervention through tax breaks or tax
  incentives
• Evidence of cost distortion
• Hidden cost distortions

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China/Vietnam

• Both countries have rejected these findings and
  do not agree with the duties imposed.
• Both countries have given the EU commission full
  access to their factories for the investigation.
• The measures are seen as Protectionist measures
  against the less expensive imports of leather
  shoes from these countries.

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EU Anti-Dumping Statistics

• Between 1995-2005 the EU imposed 189 definitive
  anti-dumping measures
• In 2004 the EU initiated 29 anti-dumping
  investigations, in 2005 it initiated 26.
• Between 1995-2005 the EU initiated 52 cases
  against China (US initiated 57 and India 76
  against China)
• Volume of Chinese exports affected by measures is
  less than 2 of all exports

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Global ViewAnti-Dumping Measures

• 1995-2005 Anti Dumping measures imposed
• EU-189, US-262, India-306
• The biggest users of anti-dumping measures in the
  global economy
• India, the US, the EU, Argentina,
• Australia, South Africa, Canada,
• Turkey, Brazil, Mexico and China
• (in that order).

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Winners/Losers

• EU Consumers
• Asian Producers
• EU Importers/Wholesalers
• Asian Local Markets

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How Far will this go?

• If Negotiations fail, measures remain in full
  force, and neither side gives in, the Case will
  be brought before the WTO-Dispute Settlement Body
  (DSB)
• Consultation
• Panel Established (DSB)
• Panel Examination
• Panel Decision
• Panel Appellate Decision
• Implementation

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Possible Outcomes

• Both the EU and China/Vietnam may come to a
  mutual agreement.
• EU would lower or drop the tariffs
• China/Vietnam would eliminate some of the State
  subsidies/tax breaks
• Negotiations would fail and the WTO DSB process
  would be initiated with both sides presenting
  data to prove their case

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How may the DSB rule?

• The current Trend favors the EU and our opinion
  is that the EU would win the DSB ruling because
• State subsidies can be proven as an impediment on
  EU producers
• China has a bad rap for dumping products on
  foreign markets
• The Tariffs imposed on the leather shoe exports
  are low enough not to affect the trade between
  the parties drastically
• The end consumer would not be affected
  drastically by the tariffs

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Appellate Body Decision if it gets appealed?

• The WTO may rule that some of the Asian-State
  subsidies, tax breaks, and benefits are not
  considered subsidies
• The WTO may rule that both European Producers and
  Asian Producers are fairly competitive against
  each other and the 16-10 tariff is not
  justified.

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How would China/Vietnam conform if EU won the
case?

• They would NOT have a choice. Wholesalers/Importer
  s in the EU market would have to pay the extra
  tariffs if they want the products.
• China/Vietnam may lower their prices even more to
  cover the measures, or they may just leave the
  prices at the same level and expect the EU
  consumers to fit the bill.

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Anti Dumping Trend?

• Anti-Dumping cases will continue to escalate, as
  more countries join the Global economy, they will
  offer more and more incentives to attract buyers,
  investors, and cash flow.

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