A special arbitration panel, set up by the World Trade Organization in July 2010 to examine Chinese complaints that the European Union had violated some of the WTO's guidelines in assessing anti-dumping duties on imports of leather shoes from China, has found some inconsistencies in the process that led the EU to take action, while rejecting the bulk of the Chinese procedural and substantive claims. Technical athletic shoes were excluded from those duties, in contrast with the situation now in Brazil, but the major sports brands had to pay duty on non-technical leather shoes. After five years, the European duties were lifted at the end of last March.
The European Footwear Alliance (EFA), which is the lobby of European shoe importers that fought against the anti-dumping duties, said it welcomed what it defined as “the Chinese government's success” in challenging the duties. It noted that the WTO panel had upheld China's criticism of the method used by the EU to calculate the duties, discriminating against the Chinese companies that had used normal pricing. The European Federation of the Sporting Goods Industry (Fesi) is a member of the EFA.
The EFA requested that the EU should implement the WTO panel's findings and that it should reimburse shoe importers the anti-dumping duties that it has “impermissibly collected” over the last five years. A spokesman for the European Commission declined to comment on the EFA's request for compensation, and pointed out that the EU had already started to prepare its compliance with individual treatment provisions.
Officials close to Brussels noted that there have been cases where the EU reimbursed anti-dumping duties after a ruling of the WTO, such as one involving Ikea's imports of bed linen from India and Pakistan, and that other cases are pending in various courts. On the other, for the EFA to recover the money, it would probably take several years of fighting in the courts.
It seems difficult that the EU will reimburse the duties also because the WTO panel found that China's arguments were generally weak. In a report of more than 370 pages issued internally last July and circulated on Oct. 28, the panel ruled, for example, that the EU did not properly determine the profitability of one producer and exporter in the course of its original investigation, and that it acted inconsistently with the WTO's anti-dumping regulations in the confidential treatment of some of the information obtained through the investigation and the subsequent expiry review.
On the hand, the WTO rejected complaints of irregularity by China on 28 other points including the individual treatment of four Chinese producers, the application of market economy principles to some of them, the selection of the samples used to determine dumping and injury, the choice of Brazil as the analogue country in the original investigation.
Rejecting one of the Chinese government's demands, the WTO panel decided that it did not have to make a recommendation to the EU for any particular action, such as the interruption of its present import monitoring scheme. Anyhow, the statistics on imports of leather shoes for the first few months after the lifting of the duties indicate that there was no surge in the quantities and no major decline in average prices (more in Shoe Intelligence).
