The Chinese community in Spain has not yet forgotten the events that took place in Elche, Europe’s shoe capital, on September 16, 2004.
That night, a group of Spanish shoemakers set on fire the factories of Chinese entrepreneurs. Local shoe industry workers say the Chinese competitors were playing dirty by offering cheap products distributed in Spain and the rest of Europe but manufactured across the world. Those criticisms, not limited to Spain or the shoe industry, clearly illustrate concerns in Europe with cheap Chinese products.
Elche, in the east of Spain, is close to Valencia and not far south of Barcelona. It is a city of 200,000 people that has lived for decades on the returns from its shoe industry. For most of this time, it has been known as a place that lives outside labor and tax laws. Employees have often worked illegally without fixed salaries or social security.
Half a century ago, US shoe companies moved their production there, only to transfer it later to markets with even cheaper labor such as India, China and Vietnam.
Invaded by migrants from all over the world (mainly South America, Eastern Europe and Sub-Saharan Africa), European societies are not coping well with change. Europe’s economies are struggling to overcome the structural challenges derived from the WTO’s Agreement on Textiles and Clothing. In some cases, manufacturers don’t even need to move production to China. Chinese workers will work in the heart of Europe for a fraction of the wages European workers demand.
In Elche, Chinese shoemakers have set up warehouses and sell shoes at one tenth the price of locally made products.
Figures fuel fears
According to official sources, about 65% of the leather shoes imported last year into the 25 countries of the EU came from China, or about 2.3 million pairs. Vietnam was a distant second with 881,080 pairs. In the first five months of this year, the percentages did not change much, with almost 68% of shoes imported into the EU coming from China and 11.5% from Vietnam.
Those numbers have led to a heavy dose of protectionism. The EU has approved a new 16.5% tariff on Chinese shoes and a 10% duty on shoes from Vietnam.
These new tariffs substitute temporary ones applied in April and were approved in early October despite objections from over half the EU members, whose commercial interests in China are too important to leave in the hands of the shoe industry.
Ironically, EU Trade Commissioner Peter Mandelson noted that "we cannot argue for openness from others while sheltering behind barriers of our own".
The European Consumers’ Organization was equally clear.
"The decision to impose anti-dumping duties on Chinese and Vietnamese shoes is anti-consumers, anti-trade and anti-competitiveness," it said in a communiqu?.
Beijing has reacted strongly against the tariffs, denouncing Europe’s unwillingness to accept the mandate of the WTO when it does not suit it.
A spokesman with China’s Trade Ministry bluntly accused the tariffs of being "illegal".
What no one seems to think, either in Elche or in the rest of Europe, is that what the sector really needs is to regroup and focus on higher end products for the luxury market. In any case, the new tariffs come at a crucial moment when China seems to be taking real steps to play by market rules and has announced its intention to educate a new batch of shoe designers and bring specialists from Europe to avoid copying Western models.
The shoemakers of Elche are the ones that may have to learn to play by the new rules of international trade. Either that or find a new sector to work in.