Belgium, Slovakia and Malta were the only EU countries to
vote for anti-dumping duties to be levied against China-made shoes yesterday.
Of course, Italy, Spain, and the other major EU shoe producers only voted
against the proposal because they thought it wasn’t tough enough. And the vote
itself was only consultative: trade commissioner Peter Mandelson will introduce
sanctions of 4% against China in April and gradually raise them to 19.4%.
It was good that so many countries showed support for free
trade, but disturbing that the commission is going to go ahead with sanctions,
which were also imposed on Vietnam. Commissioner Mandelson in his comments
argued that footwear is not "the next textiles", referring to his last attempt
to salvage certain EU production that is headed slowly for extinction. But the
analogy rings true: here are two industries in which Chinese production is
cheaper and more efficient than that of the EU (or the US). The richer nations
have stifled competition from China for years with their global quotas. The yoke
came off in 2005, and Chinese shoes and underwear flooded into European and
American markets. Rich-country producers naturally cried for protection, and
they are getting their way.
The commissioner, thankfully, also acknowledged that
so-called dumping was not the only reason for the decreased competitiveness of
EU shoemakers. Asia has "natural and legitimate low-cost advantages", he said,
and besides, many European shoemakers have moved their production to Asia. But
he is still convinced that certain benefits the Chinese government bestows on
its shoemakers are unfair trading practices. Among these he lists "cheap
finance, tax breaks, non-market land rents, [and] improper asset valuation". These
will of course be challenged by the Chinese government and producers. As with
all protectionism, the final outcome will be higher prices for consumers, and
no real delay in the loss of jobs and production for countries who cannot
compete on the level.