The devil wears Asda24 November 2009 | 2 comments | Print This Page
Another autumn in Europe, another debate about the anti-dumping measures the European Union has had in place against imports of leather footwear from Vietnam and China since 2006. We have readers in Vietnam and China, so I want to say immediately that I don’t mean to come at this from a European point of view.
In any event, there is no single European point of view on this: quite the reverse—the continent is divided over shoes.
A vote took place in Brussels on November 19 among the nominated trade experts of each of the 27 European Union (EU) member states on the measures that currently apply duties of 16.5% on imports from China and 10% on those from Vietnam because, European footwear manufacturers insist, their competitors there receive unfair help, allowing them to export their shoes to Europe at falsely low prices. The vote concerned a proposal to extend these measures until midway through 2011, but 15 member states voted against that. Ten voted for and two, Slovakia and Lithuania, abstained. Had two of the 15 countries that voted against changed their minds, even to the abstention camp, the extension proposal would have carried the day.
Important industry organisations such as the Italian Footwear Manufacturers’ Association (ANCI) and its counterpart in Spain, FICE, hope that this two-country change of heart may still take place because they firmly believe that the evidence makes it clear that footwear manufacturers in China and Vietnam are still dumping shoes on Europe. It was they who put the evidence together.
The next step is for the European commissioner for trade to consider the evidence again in the light of the November vote. She will then submit her findings to the Council of Ministers, senior representatives of the 27 governments (often the prime ministers) who will make the final decision. This is likely to take until the end of 2009.
On the plus side, from a European footwear manufacturer’s point of view, there are grounds for optimism in the comments that the trade commissioner, Catherine Ashton, has made all the way through—that the rules and the evidence will be the only things that guide her judgement. On the down side, she is leaving the post to take up the brand new position of High Representative of the Union for Foreign Affairs and Security Policy. While this new job title doesn’t exactly roll off the tongue, there’s no denying its importance. Catherine Ashton will be part of three-person permanent senior executive of the European Union. The US secretary of state, Hillary Clinton, immediately began referring to her as her European counterpart. Perhaps Baroness Ashton will have time to complete the task in foot before she starts keeping such heady company every day.
Multiplication of divisions
The rifts that have opened up in the footwear industry over this are deeply unpleasant; division usually is.
Broadly split into northern and southern groups, Spain, Italy and Portugal are fearful over the many thousands of jobs in their economies that depend on footwear manufacturing. In northern countries, where footwear is almost completely relegated to a sourcing and retail story, many commentators have lobbied loudly for Europe just to give up on those jobs.
In an article on November 18, the Wall Street Journal more or less repeated this argument. It pointed out that millions of people in China are employed in the footwear industry, while the entire leather sector in Europe employs about 250,000 people, mostly in footwear. I submitted a comment on this, pointing out that the comparison between China’s employment statistics for this sector and those of the EU are only part of the picture. The volume of EU footwear production is lower, but the value is much higher.
Italy alone exported 90 million pairs in the first five months of 2009, earning $3.7 billion from them. In the same period, China exported 342 million pairs, earning $3.05 billion. New York-based research organisation The Luxury Institute publishes reports showing the most popular footwear brands among the most wealthy consumers. The lists for the US, for Europe and for China are totally dominated by Italian and French names (the French fashion houses design and make most of their shoes in Italy now). There are good reasons for that. Quality counts.
If the northern lobbyists succeed and footwear in Europe does just become a retail-sourcing story, it won’t mean the end for quality: Asian producers can produce quality shoes, just as Asian tanners can produce quality leather. But there is genius in the shoes that feature in the lists The Luxury Institute compiles and this is helping make leather shoes such a uniquely desireable consumer product.
On November 23, the Financial Times was kind enough to publish a letter I sent—with the added bonus of a very handsome photograph of a classy dame d’un certain âge that it must have had on file— making these points. The letter (though, sadly, not the picture) is here FT letter, if you want to read it, but there was much more I would have liked to say.
If European manufacturers fail to survive partly, at least, as a result of unfair competition from Asia, it will put their entire supply base—including tanneries, of course—under severe pressure. There is no argument to be made in favour of anti-competitive subsidies from the EU or from member state governments for tanners or shoe manufacturers. We have to have faith in the rules of global commerce. But if the European footwear manufacturing sector suspects competitors elsewhere of foul play, it deserves to have the same chance as anybody else to be listened to and to have the whole argument aired. The reporting of the current debate in languages other than Italian, Spanish and Portuguese has been too one-sided.
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- Prince Zhang wrote:
10 February 2010 01:31
I like your pertinent comments
- S Tierney wrote:
30 March 2010 01:37
Sorry for not replying sooner. The blog has been a big neglected over the harsh European winter.
I really appreciate your message.
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