Aokang Won The EU Legal Fees And Spent $34 Million To Boost Confidence In Chinese Manufacturing

The anti-dumping, countervailing and other trade protection measures encountered by "Made in China" have increased this year. The confidence boosting effect of Aokang's victory cannot be ignored. When facing the unknown future, Aokang Choose to believe in the law and insist on appeal. Persistence also makes it laugh to the end. Legal personages believe that Aokang won the EU High Court's defense against EU anti-dumping, completely solved the legal issues related to this lawsuit, and found the relevant legal basis for Chinese shoe enterprises to face international trade disputes such as anti-dumping in the future

On November 18, Zhejiang Aokang Shoes Co., Ltd. received the judgment issued by the European Union High Court, which finally ruled that the European Union Lower Court had improperly used some legal provisions in the hearing of Aokang's defense against EU anti-dumping cases, lacking fairness, and finally decided that China Aokang won the case. This marks that China Aokang Company has won a double victory in defending the anti-dumping of EU leather shoes not only in administration but also in law.

Wang Hailong, the person in charge of Aokang, said in an interview with the reporter of Rule of Law Weekend that Aokang has paid a lot for this anti-dumping lawsuit. The cost of litigation was almost three or four million yuan. At that time, in the face of the abandonment of the other four enterprises, Aokang did have some hesitation, and did not know whether it would win another appeal. But Aokang's persistence finally made him laugh to the end.

Voice of Chinese enterprises

In the early 1990s, some European countries allied with each other to protect their own shoe industry and maintain prices, launched the "barrier action" to restrict Chinese shoe industry from entering Europe, and implemented“ Import quota ”Limitations. This decision lasted for 14 years until China joined the WTO.

After joining the WTO, with the substantial growth of China's foreign trade volume, various trade frictions such as anti-dumping, countervailing and technical barriers against Chinese products have also accompanied. Strictly speaking, the EU anti-dumping investigation against Chinese leather shoes began in 2005. This is just the time when the EU's 10 year quota limit on Chinese leather shoes expired. After nearly a year of investigation, the EU finally decided to impose 16.5% anti-dumping duty on leather shoes made in China and Vietnam in 2006. As the case caused great differences within the EU, EU member states eventually reduced the period of anti-dumping duties from the usual five years to two years.

On October 23 of the same year, five Chinese shoe enterprises, including Aokang, appealed to the European Union's lower court. This first instance lawsuit took four years, during which five enterprises responded and defended three times.

"Anti dumping can't be avoided, and only dissatisfaction and protest are useless, so we need to actively and positively respond." Wang Zhentao, the chairman of Aokang, said frankly that if we blindly acquiesce and tolerate, we may face higher anti-dumping duties two years later, and then Chinese shoe companies will face difficulties in the European market.

Facts have also proved that the blow of EU anti-dumping on China's shoe industry is "immediate". In the second month when the EU formally imposed 16.5% anti-dumping duty on China's leather shoes, Wenzhou exported 430 batches of leather shoes to the EU, 2.4378 million pairs, and 21.4709 million US dollars, down 32.71%, 37.8%, and 19.8% respectively compared with the same period last year. Since then, many small and medium-sized shoemaking enterprises have been unable to receive orders.

Therefore, Wang Zhentao said:“ Lose is also win, win more win 。 There is no win or lose in the fight for the dignity of national brands. We are fighting this lawsuit for the whole Chinese shoe industry, for millions of Chinese shoe workers, and for the future of the Chinese shoe industry. Of course, we want to win, but even if we lose, we also let EU countries hear the voice of Chinese shoe enterprises' defense, and let other countries in the world hear the voice of Chinese private enterprises. "

Aokang stuck to the end

The Chinese lawyer acting for this case is Pu Lingchen, who is the defense lawyer of the first anti-dumping case of China's lighters winning the WTO accession, and also the lawyer acting for the first fully successful anti-dumping case of Chinese enterprises - the anti-dumping case of Yunnan Malong yellow phosphorus.

According to him, the formal acceptance of the claims is just the beginning of a long lawsuit. After the start of the proceedings, the European Commission and Chinese enterprises will conduct two rounds of written defense in turn, and after the end, there will be another round of oral defense. Finally, the European Court will make a decision on this basis.

He said that the European Commission did not expect that more than 150 enterprises would respond to the anti-dumping investigation against China. Therefore, it launched the sampling survey procedure recognized by both WTO law and EU law, and selected the top 10 enterprises with export volume for survey. More than 140 enterprises also filled in the questionnaire, but they were not audited. They got the same results directly because those enterprises in front did not obtain market economy status.

The question is, do the remaining enterprises still need to fill in the questionnaire? stay Filing of anti-dumping investigation At that time, the European Commission required all parties concerned to provide proof of market economy status, but later it did not say anything about the last 140 enterprises that submitted the information. For example, it is like a petitioner who submits materials but is ignored. Therefore, we believe that there is no connection between the provisions on market economy status and the provisions on sampling in the EU Anti dumping Regulations, and there are some imperfections. I think the court should have a clear interpretation of these two clauses. This is the legal point of the case and our most important cause of action, Pu Lingchen said.

At the same time, according to the reporter of Rule of Law Weekend, from the perspective of damage identification, the EU has not fully complied with the legal provisions. There are problems with the causal relationship of the damage, the data calculation of the damage, the range, basis and data obtained. Moreover, as for the procedural problems, the European Commission did not make a written explanation to Aokang, Tama or any other non sample enterprises about "not reviewing the market economy status" in the whole investigation process, which made enterprises at a loss in this process.

In April 2010, the European Union's lower court rejected the claims of five Chinese shoe enterprises. On April 8, the Chinese government appealed to the WTO, filed a request for the establishment of an expert panel on China's case against the EU for anti-dumping of Chinese leather shoes, and officially launched the WTO dispute settlement expert panel hearing procedure. In May of that year, Aokang decided to continue to appeal to the EU High Court when other shoe companies announced that they would not appeal.

Wang Hailong said in an interview with the reporter of Rule of Law Weekend that Aokang Shoes is mainly sold at home, while exports are only a small part, and the EU's share in exports is also limited, so the case against Sales of Aokang The impact is not great, but Aokang's pressure is not small. Moreover, this anti-dumping lawsuit is expensive.

"The cost of litigation is almost 34 million yuan," Wang Hailong told reporters, "At that time, when faced with the abandonment of the other four enterprises, Aokang did have some hesitation, and did not know whether it would win the appeal again. After all, this case has been time-consuming and costly. The other four enterprises also felt hopeless in taking the way of final abandonment, and they were unwilling to continue to invest money and energy. After six years of litigation, if they could not win, Is it worth it? "

"The key to success lies in the correct judgment of the preliminary trial results." Wang Hailong said, "Chairman Wang Zhentao has a character of persevering in the end. After full communication with lawyers, he thought there was a legal basis for winning the case, so he chose to fight in accordance with the law."

In June 2010, after the court of first instance rejected the claims of five Chinese shoe companies, including Aokang, Aokang formally filed an appeal to the European High Court. At this time, the other four gave up and Aokang attacked alone.

"Through reading the judgment of the EU Court of First Instance, we found that the judgment was unfair." In May 2010, Pu Lingchen came to Wenzhou again and reported to Wang Zhentao about the judgment of the EU Court of First Instance, "In terms of calculating the extent of injury, the practice of the European Commission actually violated Article 1 of the EU's anti-dumping regulations; when reviewing the way the European Commission changed its measures and calculation methods, the time given by the European Commission to Chinese enterprises for review was unreasonable (5 days), and did not meet the 10 day deadline stipulated by the regulations."

"Therefore, we can still appeal to the European Union High Court for review of the trial procedure of the lower court in view of these legal doubts. Aokang still has a chance to win." Pu Lingchen's words are exactly what Wang Zhentao thought: "No matter what the outcome, we have to go through the legal process, which is an attitude of doing things."

Later, the facts also proved that Aokang's persistence made it laugh to the end, Wang Hailong said.

Pave the future legal road for shoe enterprises

On March 31, 2011, the EU announced that from April 1, it would officially cancel the high anti-dumping duty of 16.5% on Chinese leather shoes. This unreasonable trade protection measure, which has lasted for nearly five years, has finally come to an end.

In the end, the court ruled that the European Commission should compensate Aokang for the legal costs of appealing to the European Union's lower and higher courts, equivalent to more than 5 million yuan. Importers and exporters who have trade relations with Aokang can return the anti-dumping duties levied for six years from the relevant parties of the EU.

The relevant legal personages believe that Aokang won the EU High Court's defense against anti-dumping, which thoroughly solved the legal issues related to this lawsuit and found the relevant legal basis for Chinese shoe enterprises to face anti-dumping and other international trade disputes in the future.

Pu Lingchen stressed that if the export volume of a certain product is too large and the price is low, it is easy to induce restrictions on foreign trade barriers. If the price is too low and the sales volume is too large, leading to damage to the industry of the importing country, the importing country may take measures against your products. There are long-term political reasons as well as short-term political reasons. The long-term political reasons are reflected in the law. For example, in some developed countries, including India and other developing countries, China's market economy status is not recognized. In this way, Chinese enterprises will encounter an insurmountable obstacle in the process of anti-dumping. These countries do not recognize the cost of your products and the price of domestic sales, nor do they rely on this to obtain evidence for comparison and calculation. The importing country only takes the export price of our export enterprises, and if there is no cost price to compare in anti-dumping cases, it is actually a leg missing.

Wang Hailong told reporters at the Rule of Law Weekend that the difficulty of this case lies in the interpretation of relevant EU regulations. There are some blind spots in the understanding of East West cultural differences and Aokang's understanding of WTO rules.

"Aokang fights for the industry, which is worthy of respect. Foreign anti-dumping must be a bad thing at the end of the week, which has also forced Chinese enterprises to improve their industrial structure and improve their product quality." Zhou Dewen, deputy director of the Central Economic Commission for Democratic Progression and chairman of Wenzhou SME Development Promotion Association, told reporters at the end of the rule of law week.

In fact, even within the EU, many people of insight have criticized the obvious trade protectionism of the EU. The British Commerce Secretary Mandelson said at the beginning of the year that the extension of anti-dumping tariffs on Chinese and Vietnamese footwear products may damage the long-term business relations between Europe and these two countries. From this perspective“ China's leather shoes exported to Europe were subject to anti-dumping measures ”Whether the current international rules can be reasonably applied through the joint efforts of Chinese officials and civilians to break the invisible barriers of trade protection thoughts and actions that are constantly brewing and upgrading in developed countries will be the biggest focus in the coming year.

Encounter of European Union with Chinese leather shoes

From 1995 to 2005, the EU imposed quota restrictions on China's leather shoes for up to 10 years.

On September 17, 2004, the "shoe burning incident" occurred in the eastern Spanish city of Elche.

In December 2004, the Italian Footwear Association formally lodged a complaint with the European Commission, requesting an anti-dumping investigation against all footwear products exported from China to the EU.

On June 30 and July 7, 2005, the European Commission launched an anti-dumping investigation on China's labor protection shoes and some leather shoes.

On October 7, 2006, the European Union officially started to impose an anti-dumping duty of 16.5% for two years on leather shoes originating in China.

On October 17, 2006, five enterprises, including Zhejiang Aokang, filed an appeal in the European Court on the grounds that the EU imposed anti-dumping duties on Chinese leather shoes products was unreasonable.

On October 2, 2008, the European Commission announced that the EU would temporarily maintain the anti-dumping duty measures against leather shoes produced by China and Vietnam because of the initiation of anti-dumping review procedures against those two countries. This decision means that the EU formally imposed a two-year anti-dumping duty of 16.5% on leather shoes and children's shoes imported from China from 2006, which will be extended for another 12 to 15 months.

On December 22, 2009, the EU decided to extend anti-dumping measures for another 15 months.

On March 15, 2010, the European Court ruled that five Chinese shoe enterprises lost the lawsuit, and the relevant enterprises continued to appeal to the European High Court.

On April 20, 2010, the Chinese delegation to the WTO formally requested the World Trade Organization to set up an expert group to investigate whether the EU anti-dumping measures against Chinese leather shoes violated international trade rules.