EU Considers Shoes Tariff Against China, Vietnam

According to the European Union, the Chinese and Vietnamese have been dumping shoes in the EU. To an economist, dumping means selling at a price below cost. This is done to drive competitors out of business, and then the surviving companies can raise prices far in excess of where they might otherwise be. Unlike the Americans, the EU leadership doesn’t stand for this sort of thing.

Trade spokesman Peter Power told the media, “There is evidence of both dumping and injury to the European industry.” He also said that the governments in Beijing and Hanoi seemed to be involved in this dumping as a matter of policy. It “takes the form of cheap finance, non-market land rents, tax breaks and improper asset evaluation, leading to dumping.”

In the last year, Mr. Power said that imports of Chinese leather shoes are up 320%. Similar imports from Vietnam are up 700%. Growth like that against products from traditional footwear makers like Italy suggests either a huge shift in consumer taste or incredible price differentiation. Chinese and Vietnamese cobblers get less pay than their Italian counterparts, but not enough to explain the huge growth in just one year.

On April 7, Mr. Power said that the EU may slap a tariff of 20% on shoes entering Europe from Vietnam and China. Before that happens, representatives of all 25 EU members will discuss their options. Then, the EU will address the matter with Beijing and Hanoi. Only if these talks fail would the 20% tariff enter into effect.

This is the optimum way to pursue free trade; lower the barriers and watch the competition. If it starts to look unfair, consult and then, if needed, punish. This is a far more effective method than American policy, which seems to be let the other guy dump and then act surprised when there aren’t any decent skilled jobs left in manufacturing. And above all, blame the newly unemployed for not adapting.

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