China and the European Union have been unable to resolve their differences over the anti-dumping duties levied by the EU on imports of Chinese-made non-athletic leather footwear in the mandatory negotiating period that followed China’s request last Feb. 4 for consultation on the issue within the World Trade Organization. The Dispute Settlement Body of the WTO has thus decided to appoint an independent panel to settle the matter, and the governments of Australia, Brazil, Japan, Turky, Vietnam and the U.S. have expressed interest in appointing experts as third parties in the case.

This process usually takes about six months, but shoe industry officials think that the issue will probably be resolved after the scheduled expiration of the current duties on China and Vietnam in May 2011. If the Chinese arguments prevail before that date, the EU will have a choice between rescinding the duties and facing retaliatory duties by China. In the first instance, importers are unlikely to be reimbursed for the duties already paid, shoe industry officials say.

In any case, the final response of the WTO should help determine whether there would be a technical justification for extending the measures further, tipping the delicate balance among the EU governments that are in favor and those that are against. After a thorough investigation, the EU Council of Ministers decided last December to keep the duties imposed in October 2006 on both China and Vietnam unchanged for 15 months. The controversial duties have drawn criticism from the major importers, who have alleged political log-rolling as they were extended by a narrow vote.

The Chinese government appealed to the WTO in Geneva last February, challenging the European decision to keep the duty of 16.5 percent on China in a lengthy and highly technical paper. Among other things, China pointed out that applicable WTO rules require that an individual margin of dumping and duty should be determined for each known exporter, and not for the country as a whole.

Meanwhile, the Italian government, which has been instrumental in getting the anti-dumping duties maintained, is rejoicing at a positive vote by the European Parliament on first reading of a project to institute mandatory labels of imports on clothing and other textile products imported into the EU.

The European Parliament also called for more stringent guidelines for the voluntary use of the “made in” label by producers of textile items in Italy and other EU countries, as indicated in planned Italian legislation due to be implemented next October and in a recent report by a former member of the French government. The European Parliament said that at least two of the four processing stages involved in making a garment should be carried out in the country to benefit from this label.

The proposed regulations will have to be examined by the European Commission and endorsed by the European Council before going back to the European Parliament with possible adjustments for the final go-ahead (more in Shoe Intelligence).