BRUSSELS, Belgium: The European Union said Thursday it would slap trade charges on shoe imports from Macau to stop Chinese shoe makers from dodging EU trade sanctions.

The announcement was another twist in a bitter trade dispute that has divided Europeans and seen China accuse Europe of protectionism.

Beginning Friday, Macau's leather shoe exports to the EU will be charged an extra 16.5 percent of their value — the same rate levied on Chinese exports since 2006.

The antidumping charges aim to compensate for below-cost imports found to have pushed down European prices and taken market share from European manufacturers.

The tariffs currently affect 11 of every 100 pair of shoes sold in Europe, including children's footwear. The European Commission has claimed they would add €1.40 (US$2.18) to the average retail price of Chinese shoes selling for €35 (US$54.39) in Europe if importers and retailers chose to pass the cost on to customers.

An EU investigation found that shoe making and assembly shifted from China to Macau after the EU first imposed an antidumping charge on Chinese shoe exports in April 2006. The EU imported more shoes from Macau and fewer from China in 2007 and 2006 compared to 2005, the EU's executive Commission said.

Macau started buying "a massive amount" of Chinese shoe parts after the EU sanctions started, it said, claiming this "provides evidence that a large assembly operation was being set up in Macau after the imposition of those measures."

Macau — a peninsula and two islands about 60 kilometers (35 miles) west of Hong Kong — is a former Portuguese enclave that returned to Chinese rule in 1999. But, like Hong Kong, it is governed by different laws.

The EU criticized Chinese companies for "a high level of noncooperation" with its trade probe. Only 27 out of "many hundreds" replied to an EU request for information and none of them stated that they were rerouting exports to the EU by way of Macau.

In a notice in the EU's Official Journal, EU officials said this meant they relied on statistical information that showed "clear circumvention" of trade rules. They also slammed Macao's largest shoe manufacturer — which they did not name — for refusing to cooperate.

The European Union does not recognize China as a market economy because it suspects government subsidies make usual business costs such as rent much cheaper than in other parts of the world. This makes it harder for Chinese manufacturers to prove they are not selling below-cost.

EU retailers and importers — backed by countries like Sweden and Britain, which favor more open trade — resisted charges they said would prevent them from selling shoes at bargain prices.

But EU manufacturers — many of them in Italy, Spain and Portugal — demanded the sanctions to protect their industry from below-cost imports contrary to global trade rules that risked destroying their livelihood.

China's massive surge of exports to Europe, the world's largest consumer market, is both a blessing and a curse, driving down the cost of electronics and clothing — and overall inflation in recent years — while also tempting manufacturing away to lower-wage regions.

The Associated Press

Published: May 1, 2008

Source: www.iht.com