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October 10, 2009

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Tariff extension on shoes likely

THE European Commission is poised to propose an extension of anti-dumping duties on Chinese leather shoes, risking a renewed trade war with China, an industry source has said.

"I have no doubt that the commission will propose an extension," said the source, who has been deeply involved in the case.

He said there are some big European Union member states, such as Italy and Spain, which would like to see the duties to stay, although most EU countries are opposed to the move.

Despite the opposition, the commission is still expected to propose an extension of the duties, which needs simple majority support from EU member states to take effect, the source said.

But the commission is likely to propose an extension of 15 months to 2 years, instead of 5 years as in usual cases, he said.

The EU decided three years ago to levy anti-dumping duties of up to 16.5 percent on imports of Chinese leather shoes as from October 7, 2006. The decision had split the EU and was criticized by EU retailers and consumers. As a compromise, the penalty measures were originally set for 2 years, instead of 5 years.

But the commission launched a review to decide whether to continue the measures when they should have expired in October 2008. During the review period which usually lasts 12 to 15 months, the duties have stayed.

In a non-binding poll of 27 EU member states at that time, 15 voted to end the measures with 12 in favor of retaining them.

But the source warned there must be political horse-trading between EU governments when they are faced with the commission's proposal, so it is difficult to predict the result.

The commission's possible move has already received strong criticism from EU industry associations and consumer groups.

The European Footwear Alliance, representing manufacturers such as Nike, adidas and Timberland, said the duties added costs to European shoe makers themselves since many of them have transferred their production lines to China.


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