Brussels puts the boot into China over unfair shoe support

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The European Commission produced a litany of allegations of unfair Chinese state support for its shoe sector yesterday as it launched a robust defence of its plan to impose import tariffs of as much as 20 per cent.

Peter Mandelson, the EU trade commissioner, said there was "clear evidence" of intervention such as tax breaks, cost distortions and opaque accounting practices. He confirmed plans to impose a provisional tariff rising from 4.8 per cent to 19.4 per cent on millions of pairs of imported shoes from China and slightly lower rates for Vietnam.

He said he had to counter "disguised subsidies" and "state-supported dumping". "I don't believe standing up for free trade is protectionism," he told a news conference. "We are not targeting China and Vietnam's natural advantages. We are targeting anti-competitive behaviour."

He published a dossier of examples of state support for the Chinese industry including: a company in which the top management position was held by a Communist Party official whose decisions had to be approved by the Government; several instances of "significant" income tax reductions linked to export performance; one company that benefited from a seven-year exemption from any land rental fees; another that received interest-free loans from state that were not booked in the accounts; some companies that had no audited accounts while one that was unable to provide bank statements.

Trade officials in Brussels pointed out the findings were based on investigations into Chinese companies that had been approved by Beijing. The Commission said Chinese leather shoe exports had surged 450 per cent last year while the average price fell 32 per cent since 2001.

Mr Mandelson insisted he had "weighed carefully" the competing interests of manufacturers against those of retailers and importers. He said a duty would add a little more than £1 on an average wholesale price of £5.70 for a pair of leather shoes that retails at between £25 and £65.

He countered claims by the Danish government it would add 20 per cent to retail prices. "There is no evidence for such a claim," the Commission said. He also said sports shoes and children's footwear had been excluded.

The measures appeared to satisfy neither side of the debate. Italy, which pushed hardest for anti-dumping measures, said the duties did not go far enough. "Europe must do more and can do more to defend its companies and its workers," Adolfo Urso, Italy's deputy Industry minister said. But the Footwear Association of Importers Retail Chains said the tariff level was "unacceptable".