Most EU states want to terminate Vietnam shoe duties

The European Commission is expected to decide in September whether to propose extending dumping duties on imports of leather shoes from Vietnam, but most EU states want them scrapped, EU sources said.

Last October, the Commission which oversees trade policy for the 27- country European Union extended duties of up to 10 percent on Vietnamese leather shoes and 16.5 percent on those made in China, pending a review.

A majority of EU countries had opposed that move.

Industry and diplomatic sources with knowledge of the case told Reuters last Friday they expected Brussels to complete its review and submit its proposal for approval by member states by the end of September.

The Commissions proposal is expected to be submitted to member states in September. But as it stands the majority, or at least 15 member states, favor termination, one source said.

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

Major shoe-producing countries like Italy, Spain, France and Poland are all leading the charge to keep the duties, the diplomat added.

EU is the largest market for Vietnamese leather shoes and Vietnam is also the second biggest exporter of the products to EU, after China.

Last year the bloc imported US$2.5 billion worth of leather shoes from Vietnam, up 33.9 percent from 2006, figures from the Vietnam Leather and Footwear Association show.

The Ministry of Industry and Trade has asked local footwear exporters to strengthen their sales to EU as the demand for footwear imports of the bloc is expected to increase by 5.3 percent this year.

Vietnams total footwear exports in the first half this year dropped by 8.8 percent to $2 billion compared to the same period last year. However, the Vietnam Leather and Footwear Association noted that export figures have already improved since the second quarter.

EU split

The EU regularly splits over dumping cases between its member countries supporting freer trade and those worried about competition against their own manufacturers.

The shoe duties were introduced in 2006 only after a compromise deal to keep them in place for just two years, instead of the usual five. If extended again, Commission sources say the duties would last at least five years.

But the industry and diplomatic sources said a compromise being considered by EU Trade Commissioner Catherine Ashton a Briton would allow the duties to lapse once they expire on January 3.

This would give certainty either way to EU importers before the busy Christmas period and at the same time allow EU producers the time to adapt and plan against cheaper imports from Asia, another source said.

European retailers and global shoemakers, led by sports shoe producers such as Adidas, Asics, Nike and Puma want the shoe taxes axed given the gloomy economic outlook and dwindling consumer spending in Europe caused by the worst financial crisis in about 80 years.

But European manufacturers say they are unable to compete against low-cost producers in China and Vietnam and accuse those Asian governments of giving unfair subsidies that lower costs.

A review can take between 12 and 15 months, but the Commission had said it hoped to complete its work more quickly. It said it could reimburse the extra tariffs imposed during the review should it be proven that the duties were unnecessary.

If we get a termination, that will be enough. We are not going to try and make life any harder for ourselves and threaten the Commission, a representative from an EU importer said.

Source: Reuters, TN