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WTO to Probe EU Tariffs on Imported Footwear Following Complaint by China

World Trade Organization judges agreed to investigate whether European Union anti-dumping tariffs on Chinese shoes unfairly harm China’s exporters.

China asked the WTO to rule after months of consultations with the EU failed to resolve the dispute. China lodged the complaint in February, two months after the EU said it would prolong levies on leather shoes from China and Vietnam for 15 months to help southern producers compete against lower-cost footwear imported by companies such as Nike Inc. and Adidas AG.

The EU slapped duties as high as 16.5 percent on 9.7 billion euros ($12 billion) of Chinese and Vietnamese leather shoes in 2006 to counter below-cost or “dumped” imports. Four- fifths of the EU’s leather shoes come from Italy, Portugal and Spain, where producers are trying to become more competitive, according to the 27-nation bloc.

The EU’s anti-dumping law has a “very serious impairment on the interests of Chinese industries,” China’s delegation to the Geneva-based WTO said in a statement today. “It has negatively affected the jobs and livelihood of around 150,000 workers employed in the production of leather footwear.”

The complaint is the second lodged by China against the EU at the WTO, following another that involved anti-dumping duties on Chinese screws and bolts.

Vietnamese Shrimp

Separately, WTO judges also agreed to decide whether U.S. anti-dumping duties on Vietnamese shrimp, in place since 2005, break global trade rules. The complaint over U.S. the tariffs of as much as 25 percent was Vietnam’s first at the WTO.

The Department of Commerce calculates the duties using a methodology known as zeroing, which Vietnam says enables the U.S. to maximize customs duties by selectively excluding some market price data. The WTO has ruled on several occasions that zeroing violates global commerce rules.

In October 2007, WTO judges backed a Thai complaint against the U.S. use of zeroing to calculate anti-dumping duties on warm water shrimp from Thailand.

The complaint filed by Vietnam may be different because the country agreed when it joined the WTO in January 2007 to be recognized as a non-market economy. That means Vietnam doesn’t operate “on market principles of cost or pricing structure, so the sales of merchandise do not reflect the fair value of the merchandise,” according to U.S. law.

Market-Economy Status

The U.S. says that because Vietnam doesn’t have market- economy status, its shrimp exports were considered separately from those of other nations when the Commerce Department conducted its dumping investigation in 2004.

Vietnamese shrimp exports will double to $500 million this year while prawn shipments climb to $1.4 billion, Vietnam News reported on Jan. 7, citing Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters & Producers. Exports were worth $1.52 billion last year, Vietnam News said.

The WTO today also agreed investigate the U.S. use of zeroing in three anti-dumping cases involving South Korean stainless steel plate in coils, stainless steel sheet and strip in coils and diamond sawblades.

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net.

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