China: Appeal being considered by WTO

China: Appeal being considered by WTO

Complaints by China against what it perceives as unfair European anti-dumping tariffs on its leather footwear imports have won the sympathy of a leading global consultancy.

The issue has come to a head following the European Union's (EU) decision to extend anti-dumping tariffs of 16.5% on Chinese imports of upper leather footwear with the result that China has complained to the European Union via the World Trade Organisation.

But international trade consultant at PricewaterhouseCoopers, Emma Ormond, is backing the Chinese, maintaining they would not have got this far unless they believed they had a genuine grievance.

"My sympathies are with the Chinese frankly," she tells just-style. "Generally speaking, the Chinese do not take this sort of action as there will be winners and losers and they don't like losing.

"The Chinese genuinely had a good case for the measures not being extended."

But Ormond notes the distinct peculiarity of the Chinese economy in that it simply does not function as most other trading nations with generally agreed pricing norms.

"Because China is not a market trading economy, when the European Commission [EC] has its investigations it looks at named prices which is what the Chinese would call a domestic market," she says. "Because China is state trading, the EC does not use that data."

Ormond says this lack of data led the EC to look for an "analogue" country, which in this case was Brazil and which "for all sorts of reasons, was not appropriate," as its domestic price was higher, she says. "The EC claims it could not find another country [with which] to cooperate, which may or not be the case."

And the issue looks likely to be bogged down in the EC's labyrinthine internal dispute procedures, with the potential that nothing could be resolved even before the end of the latest tariff extension of 15 months.

A consultation process is now taking place with the possibility of an expert panel at the WTO making a final, binding decision, but there is no clear timetable for this as yet. "The WTO settlement mechanism can take a very, very long time," adds Ormond. "It might not be resolved before the duties expire again in 15 months."

Ormond also highlights the intricate processes of such tariff extensions, which in this case also extend to leather upper imports from Vietnam.

"The industry lodged what is called an 'outcome of the expiry review' request and this has triggered the extension," she says. "This was unusually only 15 months. This was cynical as that was what the EC thought it could get away with - there is all sorts of horse trading."

Calls to the trade commission were not returned, but only last week the body stoutly defended its position, noting it had "scrupulously followed the terms of the WTO anti-dumping agreement and the applicable Community rules in that respect.

"Anti-dumping measures are not about protectionism, they are about fighting unfair trade," said a commission trade spokesman. "The decision to impose measures was taken on the basis of clear evidence that dumping of Chinese products has taken place and that this is harming the otherwise competitive EU industry."

China's tough stance has also won favour with several trade bodies, one of which, the British Retail Consortium (BRC), insists the flare-up could have been avoided if the EU had not extended tariffs.

"The last thing we need as the economy limps to recovery is a potential trade war with China," says BRC Brussels director Alisdair Gray.