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Last Updated: Friday, 24 March 2006, 11:05 GMT
Shoe penalties anger Asian firms
Chinese woman shopping for shoes
Chinese shoemakers say they are competing fairly
Shoemakers in China and Vietnam have reacted angrily to EU penalties for alleged "dumping" of cheap footwear, and plan to appeal against the move.

Chinese firms said placing tariffs of up to 19% on some leather shoe imports was "unfair" while Vietnamese officials said the ruling was "irrational".

The penalties will come into force next month after Brussels said it had to act to counter "unfair trade" practices.

Shoe manufacturing is a major employer in both China and Vietnam.

'Unfair advantage'

China exported about 1.2 billion pairs of shoes to the EU last year while Vietnam sold about 265 million pairs.

Brussels justified the action by saying that shoemakers in both countries benefited from numerous unfair competitive advantages.

This is a very regrettable and irrational decision
Bui Son Dung, Vietnamese trade official

These included soft loans, tax breaks, low rents and export incentives.

However, both Chinese and Vietnamese firms have denied that state aid allowed them to sell shoes at cut-price levels.

"Vietnamese companies have operated according to free market principles," Trade Ministry official Bui Son Dung told the Agence France Presse news agency.

"This is a very regrettable and irrational decision."

Job threat

Vietnam has warned that thousands of jobs could be lost as a result of the tariffs, which will start at 4% in April rising gradually to 16.4% over the following five months.

Chinese officials have yet to respond to Thursday's decision to formally approve tariffs, although ministers had previously criticised the widely-anticipated move.

Chinese state-run media said the decision "compromised" Europe's commitment to free and open competition.

"The curb on China shoe imports will not sharpen EU shoemakers' competitive edge," the China Daily newspaper, regarded as a government mouthpiece, reported.

Peter Mandelson, EU Trade Commissioner
Peter Mandelson has defended the measures

Chinese shoemakers said they intended to contest the decision in a European court and had already raised money for a legal challenge.

"A number of domestic firms will jointly put forward their case and we hope to get a favourable outcome at the final rulings in about six months," said Wu Zhenchang, chairman of Guangdong-based Chuangxin Footwear.

EU Trade Commissioner Peter Mandelson said the tariffs were designed to remedy "unfair trade distortions", not to target natural commercial advantages such as cheap labour and low manufacturing costs.

Although Brussels approved the anti-dumping penalties, EU members were divided on the issue with some opposed to tariffs.

Brussels has said that the tariffs will add 1.5 euros to the average import price of 8.5 euros for leather shoes.

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