New York Times (February 5, 2010)

China Escalates Trade Fight over European Shoe Tariff

China complained to the World Trade Organization on Thursday about antidumping duties imposed by the European Union on Chinese-made shoes, raising tensions between the trading giants.

Europe has grown increasingly concerned about China’s balance of trade and what some critics view as its artificially weak currency.

China, which joined the W.T.O. in 2001, filed its first unfair trade case against the European Union last July, also involving antidumping duties. The latest move appeared intended to increase pressure on the European Union, which had itself been sharply divided over extending the shoe tariffs.

In a statement issued by its mission in Geneva, where the W.T.O. is based, the Chinese government said Europe’s actions “violated various obligations under the W.T.O., and consequently caused damage to the legitimate rights and interests of Chinese exporters.”

It added that China “had repeatedly consulted” with the European Union but said that its concerns “had not been properly addressed or settled.”

In an eight-page legal complaint, the Chinese government requested consultations on both the original 2006 decision to impose the shoe duties and last year’s move to extend them.

Nuch Nazeer, a W.T.O. spokesman, confirmed that China had formally lodged a case.

In Brussels, John Clancy, acting spokesman for trade issues, said the European Commission, the executive arm of the European Union, had taken note of the request. “Antidumping measures are not about protectionism,” Mr. Clancy said, “they’re about fighting unfair trade.”

While some European Union countries with footwear manufacturers, like Italy, have welcomed the antidumping duties, others support the position of large retailers that argue the duties hurt consumers by pushing up prices.

As a compromise, the European Union decided late last year on a 15-month extension of charges that add 9.7 percent to 16.5 percent to the import price of Chinese shoes and 10 percent to Vietnamese shoes.

The European Footwear Alliance, which represents several big global footwear brands, including Adidas, Ecco and Timberland, opposes the duties. It said in a statement that it “shares China’s view” that the European Union decision was based on flawed analysis. “Ironically the measure hurts European business and consumers the most,” it said.

In a letter sent last year to Catherine Ashton, then the European Union trade commissioner, the alliance said its members had paid around 800 million euros ($1.2 billion) in antidumping duties in the previous three and a half years, “and we fail to understand who has benefited.”

Until recently, China had made little use of the W.T.O. procedures in trade disputes with Europe. But in 2009, when the European Union applied antidumping tariffs on imports of iron and steel fasteners from China, Beijing dragged the European Union into the W.T.O. dispute settlement process for the first time.

Under W.T.O. rules, the European Union and China have 60 days to resolve the shoe dispute through bilateral consultations. If no deal is reached, China can ask the 153 members of the organization to establish a panel of three experts to examine the issue. Europe could block that once, but establishment is automatic if China makes a second request. A final decision can take 18 months or longer.