At the end of last week the European Commission announced that it had found compelling evidence of serious state intervention in the leather footwear sector, which is contrary to WTO rules. By selling shoes at less than production costs (dumping) the two countries had hugely increased their shares of European markets leading to a fall of 30% in EU production, a slump in prices of 30% and the loss of 40,000 European jobs.

Investigations at thirteen leather shoe factories in China were initiated by a proposal by the European Union (EU) trade commissioner Peter Mandelson to impose provisional anti-dumping duties of 19.4% on imported leather shoes from China and 16.8% on those from Vietnam.

The plan is for the duties to be phased in over five months, beginning at about 4%, but the proposal has first to be approved by the EU’s council of ministers which will vote on it on March 21. There are bound to be demands from EU shoe manufacturing countries like Italy, Spain and Portugal to make the duties higher though other member states may argue against any action at all given the effect that higher duties could have on inflation.

As the proposal stands, children’s shoes and high-tech sports shoes would be exempted from the duties, because the Commission’s investigations ‘suggests that there is not sufficient European production of these shoes’ to make this industry worth protecting.