EU Commission to keep duty on Chinese shoes

The European Commission is set to propose next month extending anti-dumping duties on imports of Chinese-made shoes, dividing EU member states and reigniting fears of tit-for-tat trade disputes around the world.

After a 12-month probe the European Union's executive, which oversees trade policy for the bloc, is expected to propose keeping duties on Chinese shoes, but for two years instead of the normal five, said people in diplomatic and industry circles.

In a compromise aimed at averting a "shoe war" and further damaging already brittle trade ties with the Asian powerhouse, the Commission is also likely to exempt children's footwear and sports shoes from the duties, said people with knowledge of the proposal.

The Commission will put the proposal to its 27 member states on October 22.

The EU first imposed duties, of up to 16.5 per cent on Chinese shoes and 10 per cent on those made in Vietnam, for two years in 2006 after EU manufacturers accused the two governments of unfairly subsidising their low-cost shoe makers so that EU producers could not compete. Brussels temporarily reimposed the tariffs last October pending a review, despite opposition from the majority of member states and the threat of legal action by Beijing at the World Trade Organisation.

Vietnamese-made shoes are likely to be excluded from the two-year duty extension, said the people.

"The Commission will say the data they have collected show no negative impact of the additional taxes on European importers or consumers from the duties and therefore have no legal reason to lift them," said an EU diplomat.

"But they are conscious most governments want the tariffs lifted and are well aware of the political sensitivities of the case, given the pledge by world leaders to avoid protectionist tendencies.

"They are desperately trying to find a compromise that addresses the concerns of all sides."

Austria, Belgium, Britain, the Czech Republic, Cyprus, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands and Sweden still want the duties scrapped immediately, before the lucrative Christmas retail period, said a diplomat.

But major shoe-producing members Italy, Spain, France and Poland want to keep the duties.

The EU regularly splits over dumping cases between members supporting freer trade and those worried about cheap competition undermining their own manufacturers.

The G20 has reiterated a pledge to avoid protectionist measures to shield their economies from the worst global recession since the Second World War amid growing concern that some countries could become embroiled in a trade war.

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