The Chinese side believes that the proposed preliminary determination on leather shoes put forward by the Commission lacks both factual and legal basis.
1.The Commission decision denying MES of Chinese companies lacks fairness and legitimacy
All 13 companies selected as samples for investigation are either privately owned or foreign-invested companies. They all comply with the five criteria for granting market economy status (MES). The Commission however denied MES to all of them on various excuses, regardless of the valid arguments made by the Chinese side.
Over 130 companies have cooperated in the investigation, among which 90% are non-sampled companies. Their MES claims are arbitrarily rejected, without being given any explanation. Although the WTO Antidumping Agreement allows determination on margins via sampling and weighted average approaches, determinations on MES claims shall be made through individual assessment instead of examination merely by sampling approach, because the case of each company varies from one to another. The Commission denied MES of sampled companies, which consequently denied MES of all cooperative companies and the whole shoes industry. This goes too far from the WTO Antidumping Agreement, depriving of the legitimate rights of cooperative exporters, and deviating from the EU long practice, which represents a significantly backward step of antidumping policy to China since 1998.
Furthermore, under Article 2.7(c) of the Basic Regulation, decisions on MES shall be made within three months as from initiation of the investigation. In the current case, however, the Commission did not give the disclosure of MES for the sampled companies until late December, 2005, over five months after the date of initiation of investigation on July 7, 2005. The belated disclosure has significantly passed the deadline stipulated by the EU Regulation. Moreover, the Commission until today dose not disclose MES for non-sampled companies, which is not in compliance with the WTO requirement on transparency. The proposed preliminary determination is unacceptable for the Chinese side, as it does not abide by legal procedure and thus does not have legal effect.
2.Imposing a single duty to the Chinese leather shoes industry lacks legal and factual basis
The Chinese cooperative exporters follow the investigation requirement and procedures provided in Article 9.5 of the Basic Regulation to claim both the MES and individual treatment. Denying the MES for all respondents, the Commission should have given assessment on the claim for individual treatment and made determination accordingly. However, none of any 130 respondents has received the disclosure from the Commission on their claim for individual treatment. Imposing a single duty without making assessment on claims for individual treatment explicitly violates the EU Regulation.
The investigation involves the subject products with 33 tariff headings. The product concerned presents considerable diversification in terms of quality level, price, sales channel and end use. Such a wide range of products practicably cannot have, if any, the same dumping margin and same effect on the EU industry. The Commission, however, disregards the diversified products and various market conditions to impose a single duty to all. This apparently does not tally with the factual situation.
3. Exclusion scope of STAF and children shoes shall be further enlarged
The Chinese side applauds the EU’s exclusion of STAF and children shoes from antidumping action. It however believes that the exclusion scope defined in the Commission proposal is unjustifiable. First of all, there is no reason to set the 9-euro minimum price as no STAF industry exists in the EU, hence no consequent injury. There being no ground for the 9-euro minimum price, the Chinese side requests that the EU exclude all STAF products as long as they meet relevant technical requirements. Second, on the exclusion of children shoes, the EU proposes an exclusion scope of smaller than 24cm, which China believes does not reflect the real situation. According to the Convention on the Rights of the Child, a child is defined as any human being below the age of 18. Moreover, as people’s living standards improve and young people become more athletically engaged, the shoes size for many young Europeans is already well beyond 24cm. Therefore, the Chinese side requests that the EU enlarge the exclusion scope for children shoes.
4.Mandelson’s statements on Chinese shoes industry is unacceptable
The Chinese side notices with concern that the EU Trade Commissioner Mr. Mandelson in its interview with TV media described the Chinese shoes industry in association with “cheap finance”, “tax holidays” and ”non-market land rents” etc. There exit lots of misunderstating, in spite of explanations made by the Chinese side. There exists no subsidy in this regard. Moreover, under the WTO legal framework, antidumping and countervailing are two separate subject maters and investigations, there is no link between the two. Determination on antidumping investigation shall not reflect factors of subsidy.
The Chinese side on many occasions points out to the Commission that shoes-making is a labor-intensive industry, and China has comparative advantage in terms of labor and resources. Shoes from China are not being dumped and the allegation by the EU complainants is full of flaws. Furthermore, injury does not exist. The EU industry does not suffer from the injury, and the initiation of the investigation does not have sufficient justifications. The Chinese shoes do not cause any injury to the EU industry, if any, there is no causal link in this respect. Any antidumping actions on imports of the Chinese shoes, if taken, would not be in the Community interests.
In view of the above positions, the Chinese side requests that the Commission take into consideration of legitimate concerns, and redo overall examination and assessment of the ongoing investigation, so as to make determinations compatible with the WTO rules. |
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