EU Ends Duties on Macau Footwear

The European Union (EU) will drop its penalty taxes on imports of Vietnamese and Chinese leather shoes, including those "consigned from Macau SAR". The anti-dumping measure, in place since 2005, will end on March 31.

In December 2009, the penalty taxes had been extended for a further 15 months, after negotiations between EU member-states. But this time "no request for a review was lodged," according to a notice published on last week's EU Official Journal.

However, the European Commission "considered appropriate to monitor" the imports of leather footwear from mainland China, Macau or Vietnam for one year, "with a view to facilitate swift appropriate action should the situation so require".

"In this case the number of [European] Union producers affected by potential dumping is very high and many of them are SMEs" (small and medium enterprises), the notice explains.

Most of the 8,000 European leather-footwear manufacturers are SMEs in southern Europe. Four-fifths of the EU's leather shoes come from Italy, Portugal and Spain.

The European Footwear Alliance, which gathers European companies that fought against the duties, "cautiously" welcomed the decision to maintain the footwear imports under surveillance.

Major manufacturers that make their shoes in Asia, such as Diesel, Adidas and Puma, have also fought against the renewal of the tariffs.

On December 2009, the group warned that, by April 2011, shoe businesses in Europe would have faced duty payments totalling "well in excess of EUR 1 billion [MOP 11.4 billion], which will ultimately be paid for by EU consumers".

The policy helped reduce Chinese and Vietnamese exporters' combined share of the EU shoe market from 35.5 percent in 2005 to less than 30 percent.

However, the Beijing authorities were fiercely against the anti-dumping measure. On February 2010, China launched a complaint with the World Trade Organisation (WTO) claiming the duties violated WTO rules.

MSAR re-route

In 2008, the EU extended the 16.5 percent duty on Chinese leather shoes to Macau after finding that Chinese exporters shipped them via the territory or assembled them here to evade the levy.

The decision was the final nail in the coffin for the flagging local manufacturing industry. Between 2007 and 2010, exports fell from MOP 20.4 billion to around one-third, MOP 6.96 billion.

The EU received a number of complaints regarding Macau following a significant increase in exports of shoes from the territory. That aroused suspicion that Chinese manufacturers might be using the territory to avoid paying the taxes.

The investigation found that shoes were sold from mainland China to MSAR and later re-exported to the EU. One other strategy was to assemble footwear in Macau with parts made across the border.

In 2007, Macau bought almost 6.4 million pairs of leather shoes from China and 5,278 tonnes of footwear parts, for a population of only 538,000 people. Two years earlier, the territory had bought only 43,000 pairs of shoes and 243 tonnes of footwear parts.

After the investigation, EU Commission of External Trade concluded that there were very low chances that an industry with the size of Macau could support a growth of 400 percent in footwear's exports in less than two years. Exactly the same time that has passed since the establishment of temporary duties to China's shoes exports.