Chinese Shoe Sales Strain EU Trade Ties

Chinese shoe manufacturers have increased their exports to the European Union by almost 700 per cent since trade restrictions were abolished in January, sparking immediate calls for Brussels to place more curbs on shipments.

The dramatic rise was accompanied by a steep fall in prices as Chinese producers recorded massive gains in market share, according to data released by the European Commission yesterday. In some categories, imports of Chinese shoes rose 14-fold while the average price of a pair of shoes from China dropped 28 per cent.

The figures provide fresh proof of China's overwhelming manufacturing prowess but also look certain to strain further the troubled trade relationship between China and the EU.

Brussels and Beijing are already at odds over the massive rise in textiles and clothing imports sparked by the end of worldwide textiles quotas in January.

In response, and to alleviate the pain of European manufacturers, the Commission is preparing temporary curbs on Chinese imports of T-shirts and flax yarn. Such "safeguard" measures are allowed under China's treaty of accession to the World Trade Organisation.

But now Brussels is also facing calls to rein in shoe imports action that would most probably take the form of anti-dumping duties.

In a sign that the Commission is ready to pursue such measures, a spokeswoman for Peter Mandelson, EU trade commissioner, said Brussels would look into industry complaints "as a matter of urgency".

"If products were exported at below the cost of production, we would not hesitate to take action," she said.

Both the Italian government and the country's shoemaking association said they had complained about Chinese shoe imports to the Commission. Adolfo Urso, a deputy Italian industry minister, said he had urged Mr Mandelson to "intervene urgently" to defend Italy's shoe industry.

"It's a red alert for the import of shoes from China. The situation is dramatic for this vital component of the Made in Italy export sector," Mr Urso said. "Italy is ready to do battle in Europe to ensure commercial rules are respected." Rossano Soldini, president of the shoemaking association, said the sector could lose up to 40,000 of 101,000 jobs this year if China's import boom continued.

France and Italy have for some time been the cheerleaders for tough sanctions against China, citing predictions that the European textile sector could lose as many as 1m jobs this year. But EU states such as Sweden argue curbs would send a protectionist signal at a time when the EU is trying to spearhead the Doha round of world trade talks.

Mr Mandelson has said his preferred solution would be an agreement with Beijing setting strict but voluntary caps on exports.