The decision of the European Union to impose anti-dumping duties
on Chinese shoes will not save local shoemakers from increasingly
fierce competition but will rather hurt Chinese counterparts
unfairly.
By yielding to protectionism at home, the EU has given up an
opportunity to sharpen its own competitiveness. The unjust punitive
measures against Chinese shoes, which come into effect early next
month, will only compromise the EU's commitment to free and fair
trade.
Ever since the proposed anti-dumping measures were unveiled last
month, Chinese shoemakers and trade officials have expressed strong
opposition not about the exact margin of the tariffs, but about the
reasons why the penalties are being instigated in the first
place.
EU trade officials claimed that China is selling leather shoes
at below-cost prices and violating world trade rules. Even though
their representatives were sent to visit China recently, the
correct practices observed in Chinese shoe-making companies were
obviously not taken seriously during the EU's decision making.
Private firms and joint ventures have already rendered shoe making
into one of the most competitive businesses in China.
It is well known that China, as the most populated country in
the world, currently enjoys a great advantage of low labor
costs.
Even though the country has not been universally accepted as a
market economy 53 countries have so far fully recognized the
country's market economy status this will not change the fact that
Chinese manufacturers, especially in those labor-intensive sectors,
have to be very competitive in pricing. Cutthroat domestic
competition and the ample supply of the cheap labor force will
naturally make cost-effectiveness a precondition for their
survival.
However, this basic logic of comparative advantages that
underpin rapid growth of international trade and the accelerated
economic globalization do not seem to sell well in the EU
nowadays.
Protectionist pressure from some of its member countries has
persuaded the EU to endorse short-sighted sanctions on Chinese
shoes.
Yet, the benefit for those few EU shoemakers will be limited, if
there is any at all.
The curbs on China shoe imports will not sharpen EU shoemakers'
competitive edge and hence secure their market share.
The cost EU consumers have to pay by buying more expensive shoes
will prove unnecessary and fruitless.
Painful but inevitable industrial restructuring would be the
better option. The quota system that only ended at the beginning of
2005 shows that protection will not goad local shoemakers to slash
costs aggressively.
And the hurt such unfair trade penalties exert on Chinese
shoemakers is unfair and detrimental to bilateral trade
relations.
It is absurd that Chinese shoemakers will be punished simply for
producing more efficiently than their rivals in developed countries
and other developing economies.
As the largest trade partner of China, the EU is admittedly
quite exposed to the so-called "China factor," while benefiting
tremendously from cheap Chinese imports.
China is competent at producing labor-intensive goods, but not
all goods. The shock that imports from China make on local
industries can serve as a needed stimulus for them to upgrade or
move into production of what the EU, not China, is good at.
It is predictable that as fair trade helps boost economic
growth, an ever-expanding Chinese market will not only benefit
domestic companies but also trade partners. Those capable of
providing alternative products will undoubtedly benefit.
Unfortunately, EU trade officials lose sight of such a win-win
solution overall, when escalating protectionism.
To make bilateral trade and global trade at large a sustainable
growth engine for all, the EU should not continue to avoid the
price of industrial restructuring, that every country has to pay in
its own way.
(China Daily March 24, 2006)
