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Anti-dumping action goes against promises and trade liberalization

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The People's Daily publishes today an article on the European Union's possible anti-dumping action against Chinese shoes by Zhang Jianxiong, researcher at Chinese Academy of Social Sciences.

The article argues that the evidence of dumping of China-made shoes on the EU market is not "compelling" and it is protectionism to take the anti-dumping measures.

The European Union will discuss on Mar. 9 whether it would levy anti-dumping duties on shoes from China and Vietnam after EU trade commissioner Peter Mandelson claimed he had "compelling" evidence regarding dumping of Chinese shoes.

The European Commission has proposed a six-month punitive duty on shoes from China from April 7 which would start from 4 percent and rise to 19.4 percent. Before that, the EU has rejected petitions of 13 Chinese shoemakers for grants of market economy status on account of not in compliance with the international accounting standards.

The EU probe into Chinese shoes has stirred strong oppositions from relevant industrial guilds both in China and Europe. 830 million US dollars of Chinese commodities and tens of thousands of Chinese shoe manufacturers will be affected if the duties are imposed. European organizations, like EuroCommerce, criticized that the move would push shoe product prices up and hurt European consumers, retailers and importers.

The European Union has launched some 100 anti-dumping investigations since the European Communities initiated the first investigation on salt and glucide from China in 1979.

The fact that 98 percent of Chinese shoemakers are private or joint ventures makes it really absurd to label them as non-market economy. The "compelling" evidence Mandelson has referred to points to China's "disguised subsidies" to those businesses. But it is some European countries, most typically Italy, that have long kept supporting small and medium sized enterprises.

However, Children's leather shoes and hi-tech sports shoes are exempted from the proposed anti-dumping measures. Mandelson explained that actions against children's shoes would affect many European families with children, thus not in the interest of the public, while hi-tech sports shoes are not produced much in Europe.

That "flexibility" apparently has unveiled the real purpose disguised under the dumping accusation: curbing the growth of China's shoe exports to the EU market with the stick of trade protectionism.

The six-month progressive duties, up to 19.4 percent, as Mr. Mandelson has proposed, will be turned into a five-year formal action from a provisional one if China fails to satisfy the EU six months later. The EU puts pressure on China in this way to pose either taxes or quotas on its shoe exports to the EU.

In the protocol of China's accession into the WTO, the EU promises the lifting of quotas on Chinese shoes as of 2005. So China has the right to expand its shoes exports after it joined the WTO. In this case, the EU's anti-dumping attempts against shoes from China breaks its promise. In nature, that is similar to its previous intention of putting limits on Chinese textiles last year.

The evidence on which Mandelson's accusation is grounded is not compelling enough, neither does it conform to the mega-trend of the trade liberalization. Only a minority of EU members, that is, Italy, Spain and Portugal, called on restrictions on Chinese shoes. Sweden, Denmark, Germany, Netherlands and the UK all have expressed objections to such a move.

If the dispute escalates, bringing the case to the WTO may be the only choice that China has to protect its rights and interests.

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