The anti-dumping duty imposed on China's shoe-making industry by
the European Union (EU) is turning out to be a force helping to
reshape the industry's competitiveness, however, the EU decision is
still unwise.
The protectionist measure will add little to local employment in
Europe and is unfair for both Chinese shoe-makers and European
consumers and businesses in general.
The EU agreed last Wednesday to impose tariffs on Chinese and
Vietnamese shoe imports for two years "to prevent cheap imports
from flooding local markets."
For Chinese shoe-makers, the new tariff has only caused
disappointment rather than panic.
Since April when the EU imposed six-month tariffs of 19.4
percent on leather shoes from China, Chinese shoe-producers have
reacted by diversifying their overseas market or shifting its
growth focus from quantity to quality. Some are set to build
overseas factories to address the tariff issue. All are painful and
risky adjustments, but Chinese shoe-makers have recognized the need
to take them.
The calm response from Chinese shoe-makers to the EU's two-year
duty does not mean the new protectionist measure is acceptable in
any way.
The Chinese Government has already expressed its
dissatisfaction, noting that the filing, the investigation and the
ruling of the case has legal defects that run contrary to World
Trade Organization rules and the EU's own anti-dumping laws.
However, what makes this protective measure particularly
unwelcome is not only its violation of the prevailing principle of
free and fair trade, it also draws vehement criticism from home for
ostensibly causing more damage than good to local economies.
The European Commission estimated that the ruling could add €
1.40 (US$1.80) to the price of Chinese shoes, which average retail
price is € 35? (US$44.80), if importers and retailers pass the
increase on to customers.
Reduction of shoe imports from China will more than likely lead
to job losses to EU's retailers and importers as well as trigger a
rise in consumer prices.
While risking so many negative consequences, the only group that
seems to benefit from this protectionist measure is shoe-producers
in some EU member countries. But even that supposed gain to some
local producers is far from secured. In the era of accelerated
globalization, the prosperity of an economy or an industry
increasingly hinges more on its flexibility to adapt to changes
than anything else.
China's rise as a manufacturing centre is a phenomenon of this
time.
In the world's industrial shoe chain, the EU enjoys superiority
in the design, technology, equipment and sales network while China
is good at processing with a huge and low-cost labor force.
The expansion of China's market shares in shoe-making will be
simply market competition in practice.
Meanwhile, the EU can also concentrate on doing the things it
does best. That will require the EU to adopt measures to facilitate
employment in sectors where its superiority is the greatest.
Protectionist measures, such as the anti-dumping duty on
China-made shoes, are definitely not an option.
(China Daily October 9, 2006)
