European Trade Commissioner Peter Mandelson has today confirmed that the European Commission’s investigation into complaints of dumping of leather shoes from China and Vietnam has found compelling evidence of state intervention, dumping and injury. The Commissioner has recommended a progressive duty is imposed over five months which will ensure that retailers with goods in transit are not suddenly faced with an unexpected full tariff at the border.

The Trade Commissioner has recommended provisional duties of 19.4% for China and 16.8% for Vietnam. He will recommend the duty be phased in over the five month period, beginning at about 4%. It nevertheless means that after five months a full duty will be in place and the damaging effects of dumping will be counteracted. There would be no quantative limit on import of leather shoes from Vietnam and China.

This case concerns about nine pairs of shoes from every 100 pairs bought by Europeans. There is clear evidence that although leather footwear import prices to the EU over the last five years have fallen by more than 20% consumer prices have remained stable and even risen slightly. A duty would add just over 1.5 euro on average wholesale prices of 8.5 euro for leather shoes that retail between 30-100 euros. There is margin within the supply chain to absorb a small duty on import costs by spreading it across product ranges and the distribution chain.

The Trade Commissioner will recommend that children’s shoes and high-tech sports shoes be excluded from provisional measures because its investigation suggests that there is not sufficient European production of these shoes for injury to have been caused.

Since 2001, closely tracking the rise in dumped imports, European footwear production has contracted by about 30% and domestic prices have fallen by 30%. Some 40,000 jobs in the sector have been lost, and while this is not related solely to dumped goods, state-intervention and dumping in China and Vietnam have exacerbated intense competition.

Vietnam, however, has said its shoe industry is working under market economy rules and has denied any dumping in the European market. Vietnam's foreign ministry spokesman Le Dung, said: "We believe that Vietnamese enterprises do not sell their leather footwear to European market at dumping prices. Those enterprises are operating under the rules of a market economy and equal competition."