June 30, 2005

EU and China start second trade spat over shoes

By Aine Gallagher and David Lawsky

BRUSSELS (Reuters) - The European Union and China plungedinto a second trade spat on Thursday -- this time over shoes --but Brussels said a deal was still possible over Beijing'ssurging footwear exports.

The European Commission, in charge of trade policy in the25-nation bloc, began a probe into whether Chinese and Indianreinforced shoes were being sold in Europe for less than theycost to make, a practice known as dumping or predatory pricing.

The EU sees China as the main culprit. Its share of theEuropean market in the heavy-duty shoes worn by workers in theconstruction and catering industries is much bigger and hasgrown more quickly than India's.

"If as a result of the investigation started today, it isdemonstrated that predatory prices are practised then actionwill be considered," said European Commission trade spokeswomanClaude Veron-Reville.

The EU could levy extra duties on shoe exports from the twoAsian states if it finds that the footwear is being dumped.

The Commission wants to end the probe, requested byindustry, within nine months and held out hope for asettlement.

"A negotiated solution is still possible," Veron-Revillesaid.

The Commission is also mulling a complaint against Chineseleather shoe exports.

Brussels and Bejing only recently resolved a dispute oversurging imports of Chinese textiles to the wealthy bloc,agreeing to a maximum 12.5 per cent a year rise in importsuntil the end of 2007.

The United States has placed emergency curbs on Chinesetextile imports and the two sides have failed to reach a deal.


A senior Chinese official will visit Brussels on Monday todiscuss trade issues and the shoe issue could be raised then,Veron-Reville said.

Beijing has already said it is firmly opposed to aninvestigation by the EU into allegations that Chinese exportersare dumping exports of reinforced shoes, known as safety shoes.

Although the Commission said Chinese textile and shoeexports have exploded since the scrapping of global quotas inboth sectors on Jan. 1 this year, the data it released coveredsafety shoe exports in the period 2002-2004.

China had a 19 percent share of the EU's safety shoe marketin 2004, more than three times its 6 percent share in 2002, theCommission said. India had a 5 percent share in 2004, comparedwith only 3 percent in 2002.

Earlier this month, the Commission said there had been ayear-on-year rise of 681 percent in imports of six categoriesof Chinese footwear -- excluding safety shoes -- in the firstfour months of 2005. Prices slipped 28 percent over the sameperiod.