EU defends shoe levy after China launches WTO complaint

(BRUSSELS) - The European Commission on Thursday defended its penalty taxes on Chinese shoe imports as "the right thing to do" after Beijing launched a complaint with the World Trade Organisation (WTO).

"Anti-dumping measures are not about protectionism, they are about fighting unfair trade," acting EU Commission Trade Spokesman John Clancy said.

"In this respect we believe this is the right action to be taken," he added, suggesting that Europe was in no mood to lift the levies despite the Chinese pressure.

"The decision to impose measures was taken on the basis of clear evidence that dumping of Chinese products has taken place and that this is harming the otherwise competitive EU industry," he stressed.

Beijing earlier Thursday launched a complaint with the world trade body arguing that the EU import taxes on its shoe exports violated WTO rules.

"China has made a request for consultations to the WTO dispute settlement body regarding the anti-dumping measures taken by the EU against Chinese shoes," Beijing's commerce ministry said in a statement on its website.

It added that China had "officially launched a WTO dispute settlement procedure."

If there is no bilateral agreement on the issue within 60 days the WTO's dispute settlement body will set up a special group to rule on the trade dispute.

Last December the EU extended it punitive taxes on imports of Chinese and Vietnamese leather shoes -- first introduced in 2006 -- by 15 months.

The levies were originally applied after an EU investigation found that some Chinese and Vietnamese shoes were being sold at overly low prices in Europe, something made possible through state aid in the form of soft loans, tax breaks and cheap rents.

Chinese firms reject the charges.

Clancy refused to be drawn on whether Beijing's action was a sign of increasing Chinese assertiveness on trade issues. "I think that is an interpretation," he said.

The anti-dumping measures in the EU -- home to half a billion people -- see import duties of 16.5 percent levied on Chinese shoes with leather uppers and 10 percent on the same kind of shoes from Vietnam.

They cost manufacturers with operations in those countries hundreds of millions of euros (dollars).

While the European Commission, the EU's executive arm, is concerned about unfair trade from China, the European Footwear Alliance (EFA) supports Beijing's position as its members produce in China a lot of the shoes which are penalised.

"Ironically, the measure hurts European business and consumers the most," the footwear alliance said in a statement reacting to China's decision to take the matter to the WTO.

"The extension of the footwear duties opens the door to retaliatory measures on EU exports to China and puts paid to European leaders' repeated pledges to defend free trade," the EFA argued, pointing to duties recently applied on EU exports of carbon-steel fasteners to China.

"The EFA calls on the European Commission to take immediate action to prevent relations between the EU and China from degenerating further.

"The European Union's reputation as a sponsor of free trade as well as the credibility of its use of trade defence instruments are at stake," said the group whose members include the makers of Hush Puppies, Levi's, Rockport and Timberland.

It's not the first time Beijing has employed the WTO to settle a trade row with Europe.

Last October it asked the trade body to rule on a dispute with the European Union over anti-dumping measures imposed by Brussels on imports of Chinese-made screws and bolts.