shoelace.jpgDon't
you just love to see politicians tie themselves in knots? This time its
Peter Mandelson, European trade commissioner, and the knots are in his
shoelaces.

According to the Times, Mandelson is under attack from UK shoe retailers
for reneging on a previous promise to exempt the majority of Chinese —
and Vietnamese — footwear from punitive anti-dumping duties.

Instead
of paying an average of 3% to 4%, the new scheme being planned by the
EC could result in retailers paying duty rates as high as 16% on
imported Chinese shoes from early October. The measures would last for
five years.

This is a long-running saga
and it stems from a EC investigation that found widespread violation of
international trade rules that meant Chinese and Vietnamese shoes could
be imported and sold in the EU at below cost price, so putting EU-based
shoe manufacturers at a disadvantage.

The measures supposedly
employed to help Chinese footwear manufacturers include low-cost
financing, tax breaks and other incentives. Whether these are fair or
not depends, of course, on which side of the trade barrier you are
standing.

China's deputy minister of commerce “vehemently rejected” the accusation of dumping during the recent EU-China Conference, which was supposed to herald a new climate of understanding on EU-China trade issues.

An equally staunch and more surprising defence of China comes from Tim Wilson, an EngagingChina reader, whose UK textile company, Chunkichilli Knitwear, operates successfully in China. In a comment to our earlier post, he says:

It
looks to me like Mandelson had already decided that he was going to
slap anti-dumping duties on Chinese and Vietnamese shoes and he just
sent people out there to dig up whatever evidence, however implausible,
to bolster his case.”

Whatever the merits of this
case, I think the whole sad affair shows that even if you agree with
them, anti-dumping measures are difficult to devise and even more
difficult to make work.

If the EC can tie itself in knots over
the seemingly simple case of leather shoes, than just imagine the
problem products that await the Brussels bureaucrats when they deal
with hi-tech products such as CNC machine tools or optical switching
systems.

EU manufacturers have yet to feel the force of Chinese competition in these hi-tech product areas, but they will, they will.

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