EU Anti Dumping Violations On Chinese Leather Shoes

As one of the most influential Trade Friction cases and "shoes exported to EU" will have a demonstrative impact on future Sino foreign trade relations

On April 20 local time in Geneva, the Chinese delegation to the World Trade Organization (WTO) formally requested the WTO to set up an expert group to investigate and decide whether the EU anti-dumping measures against Chinese leather shoes violated international trade rules.

At the meeting of the WTO dispute settlement body held on the same day, the Chinese delegation pointed out that the anti-dumping measures taken by the EU against Chinese leather shoes violated relevant WTO agreements in both procedure and nature, and damaged China's legitimate rights and interests. Since the latest round of consultations held by the two sides on March 31 could not lift China's concerns and find a solution satisfactory to both sides, China requested the WTO dispute settlement body to set up an expert group to ensure the protection of China's legitimate rights and interests.

The Chinese delegation urges the EU to correct its relevant legislative procedures in accordance with the WTO agreement and to terminate the anti-dumping measures against Chinese leather shoes that violate WTO rules.

At the meeting that day, european union He expressed "regret" at China's request and prevented the establishment of the expert group in accordance with relevant procedures. However, if China again requests the establishment of an expert group at the meeting of the dispute settlement body next month, the expert group will be established automatically.

The European Commission "makes decisions for the purpose of making decisions"

As a trade friction case with considerable impact in recent years, the "shoes exported to the EU case" is widely recognized by the industry, which will have a demonstrative impact on the future Sino foreign trade relations.

In January this year, EU member states anti-dumping The Committee voted that China and Vietnam should continue to impose 16.5% anti-dumping duty on imported leather shoes. Unfortunately, the voting result decided to extend the anti-dumping measures on leather shoes of China and Vietnam for another 15 months, with the tax rate unchanged.

The unexpected verdict made Chinese leather shoe manufacturers extremely dissatisfied. On February 4, the Permanent Mission of China to the WTO sent a letter to the EU WTO Mission to propose a consultation request under the WTO dispute settlement mechanism regarding the anti-dumping measures taken by the EU against Chinese leather shoes, and officially activated the WTO dispute settlement procedure.

In accordance with the WTO dispute settlement procedure, the two sides subsequently held a 60 day bilateral consultation on the case. In the event that the consultation failed, the prosecution has the right to request the establishment of an expert group to investigate and adjudicate the dispute.

Guo Weiwen, secretary-general of the Anti dumping Alliance for Chinese Leather Shoes Exported to the European Union, told Nanfang Daily: "In the case of 'shoes exported to the European Union', the European Commission is not fair. They are 'adjudicating for the sake of adjudication'."

Guo Weiwen said that there are many legal loopholes in the case of shoes lost to the EU. "Since 2006, we have been communicating and understanding with the European Commission and industry professionals in various countries, including the original trial, review and final adjudication. Many of our important legal opinions and bases have not been taken seriously, and we believe that the case has not received the fair adjudication it deserves," Guo Weiwen said.

Yao Jian, spokesman of the Ministry of Commerce, said to the case that the EU's anti-dumping investigation and ruling on Chinese leather shoes violated relevant WTO rules and damaged the legitimate rights and interests of Chinese enterprises.

WTO Director General Lamy has publicly said that if China believes that the EU has misquoted WTO regulations, it can appeal to the WTO.

Whose Cheese Has Chinese Shoes Moved?

In January 2006, the European Commission refused to recognize the "market economy status" of 13 Chinese shoe manufacturers, which put the Chinese shoe industry in a very disadvantageous position in anti-dumping cases. On February 23, the European Commission released the results of its anti-dumping investigation, which determined that China's shoe industry accepted government subsidies in disguised form and dumped on the EU market at a price lower than the "cost". Subsequently, EU member states decided on March 16 to levy anti-dumping duties on Chinese footwear products from April 7, 2006, and gradually increase the anti-dumping duties from 4.8% to 19.4% within six months.

Over the past four years, there has been a growing voice within the EU against the imposition of anti-dumping duties on Chinese shoes.

Lord Mandelson, the British Business Secretary, has warned that the extension of anti-dumping duties on Chinese and Vietnamese footwear products may damage the long-term business relations between Europe and these two countries. He expressed concern that one of the consequences of the economic crisis is that EU countries are less enthusiastic about free trade. "A more introverted attitude is growing among EU member states, that is, 'Let's keep what we have now'," Mandelson said.

Guo Weiwen said that, in fact, the internal industry of EU countries is dissatisfied with the ruling, "because such a ruling does not help their domestic industry in any way. In fact, many major European brands need to place orders in Asia, which is the result of global division of labor, and there is no dumping".

Industry voice: fight with the European Commission to the end

According to statistics, after the EU took anti-dumping measures against Chinese shoes, the total amount of shoes imported from China by the EU dropped by 15%. The data shows that the sales volume of shoes exported from China to Europe has dropped by 15% in the past three years, and the revenue has dropped from 2.08 billion euros in the peak period to 1.78 billion euros.

Wu Zhenchang, the initiator of the "EU Anti dumping Response Alliance for Chinese Shoes" and the chairman of Guangzhou Chuangxin Shoes, said that the appeal of the EU to the WTO was mainly led by the Chinese government, and the enterprises would try their best to help. Recently, they have been in communication with the Ministry of Commerce, mainly cooperating with lawyers to suggest providing the government with detailed materials of enterprises, so as to prove that Chinese shoe enterprises do not dump on the European market.

Wang Hailong, spokesman of Aokang, also said in an interview with our reporter that he would cooperate with EU customers, lawyers and the Chinese government to carry out the lawsuit to the end. Since the EU imposed an anti-dumping duty of 16.5% on China, although EU customers have been paying anti-dumping duties all the time, the increase in costs has seriously affected the development of Aokang in the EU market. Before 2006, the average annual growth was doubled. After the levy, it was almost difficult to develop new customers, and the original customers were particularly opposed to the EU imposing anti-dumping duties on China.

Pu Lingchen, the lawyer acting for Chinese shoe enterprises in the China EU shoe trade lawsuit, believes that the EU's extension of anti-dumping measures for another 15 months has obvious political tendencies, neither explaining the significance of extending anti-dumping duties nor making a regulatory response to the Chinese shoe enterprises' defense against the EU shoe industry of "no harm" and "no causality", These are all worthy of doubt.

The latest statistics from the China Leather Industry Association show that the previous anti-dumping duties have led to a 20% reduction in the output of leather shoes exported to Europe. As the export to the EU decreased by about 40 million pairs of shoes, this alone caused about 20000 workers in China to lose their jobs.

The domestic shoe industry is very dissatisfied with the high tariffs imposed by the European Union on China's shoes exported to the European Union in December last year due to the fact that there is still dumping. Pu Lingchen, the Chinese lawyer acting in defense of EU anti-dumping measures, said that our final decision to submit a request for consultation under the WTO dispute settlement mechanism to the WTO was a helpless move. "The domestic industry reacted intensely to the final decision of the European Commission last December to extend anti-dumping measures, and we must fight with the European Commission to the end".

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The devaluation of the euro damaged China's shoe exports

The once glorious euro is now becoming the biggest entanglement of Chinese export enterprises.

"Recently, almost all orders settled in euros lost money." The head of a textile and clothing export enterprise in Nanjing, Jiangsu told reporters the impact of the continued depreciation of the euro. "The profit of textile and clothing exports is only a few points in total. The euro has depreciated by more than ten points recently, which means that our costs have increased so much at a time, which will certainly affect the purchasing confidence of buyers."

Experts believe that the impact of the rapid depreciation of the euro will be relatively lagging, and the growth of China's exports to Europe will slow down in the future.

The person in charge of the above textile and clothing export enterprise said that although the orders settled in euros accounted for a small proportion of the company's overall business, in view of the unfavorable economic situation in the EU, the company's European Business Department has warned that the business exported to Europe this year is likely to suffer losses. "At present, we hope that the RMB exchange rate can remain stable, which is the only way to offset the impact of the devaluation of the euro."

Since this year, the euro has been falling in a weak trend. So far, the RMB has appreciated by 14.5%, which makes China's export enterprises to Europe have to face the universal cost rise.

Huo Jianguo, president of the Research Institute of International Trade and Economic Cooperation of the Ministry of Commerce, analyzed that the devaluation of the euro was relatively slow before, but in less than a month from late April to mid May, the devaluation rate increased rapidly, almost equal to the effect of direct policy regulation. Therefore, China's electromechanical, textile and other products exported to Europe will feel a significant impact later.

Huo Jianguo said that the growth rate of China's exports to Europe is still at 25%. However, the impact of the rapid devaluation of the euro may be relatively lagging, so the growth rate of China's exports to Europe may fall back in May. The growth rate of China's exports to Europe will fall back significantly in June, and may further decline by 6-7%.

"At present, the United States has begun to worry about the trend of the euro, and China's exports will also be greatly impacted. It can be said that stabilizing the euro is the current top priority." Huo Jianguo stressed.

Li Haijun, head of import and export business of Wenzhou Aokang Shoes, pointed out that the weakness of the euro reflects the current economic situation in Europe and the consumption capacity of the people. As the main exchange rate risk is borne by the purchasers, it is likely that they will not dare to place large and long orders, but will instead place small and short orders, which will shrink China's export volume.

At the same time, he predicted that the company's exports to Europe in the second half of the year were not optimistic, and exports to Europe this year would decline.

According to the news from Reuters, the recent estimates of the EU Executive Committee showed that the consumer confidence index of the 16 countries in the euro area fell to negative 17.5 in May, falling back to a seven month low; For the wider 27 EU countries, the indicator fell to negative 14.7 from negative 12.3 in April.

The decline in consumer spending has now become the weakness of the euro zone. If the euro continues to depreciate, China's exports to Europe will be hit hard.