EU sets out new trade priorities amid wrangles over Chinese shoes By Shada Islam

dpa German Press Agency
Published: Tuesday October 3, 2006

By Shada Islam, Brussels- The European Union is set to release a new list of key trade priorities Wednesday amid continuing wrangles over calls to slap tough fines on low-cost Chinese footwear exports to the 25-nation bloc. EU trade chief Peter Mandelson says Europe will continue efforts to clinch a global trade deal within the World Trade Organization (WTO).

With the WTO talks crippled by transatlantic farm trade quarrels, Mandelson will insist that the EU must also forge bilateral free trade pacts with emerging nations in Asia and elsewhere.

In addition, the EU trade chief will vow tougher moves to clamp down on the production of counterfeit goods in China and outline the bloc's determination to secure better access to markets in emerging nations.

"We are setting out the framework for what Mandelson wants to achieve over the next three years," EU trade spokesman Peter Power told Deutsche Presse-Agentur dpa.

The focus will be on asking all emerging countries to open up their markets to Europe by eliminating non-tariff and regulatory barriers.

Trade relations with an increasingly competitive China will figure high on the agenda, Power said.

"The message for countries is that if Europe is to be open to your exports, we expect you to be open as well," he added.

The EU's emphasis on China is no surprise. While EU-China trade relations are thriving - China is now Europe's second largest trading partner - they are also often fraught.

A number of Chinese textile exports are currently subject to EU-wide quotas and Brussels is also up in arms at China's flourishing market in counterfeit goods, a concern shared with the United States.

Even more controversially, Mandelson is currently seeking a go- ahead from EU governments to slap tough anti-dumping fines on cheap Chinese leather footwear exports.

Calls for the duties - which would raise the price of Chinese shoes in Europe - have come from the European footwear industry and the Italian government which says Chinese exporters are destroying the country's shoemakers.

But European retailers and companies that outsource production are up in arms against the fines, arguing that any extra charges on Chinese exports will hurt them as well.

The 25 EU states are split over the issue. So-called "northern liberals" such as Britain, Scandinavia and Germany are opposing the duties in the name of free trade. More protectionist southern European states, including Italy, Spain and Greece, say tough action against China is needed to protect Europe's footwear producers.

In April, the EU imposed provisional tariffs of 19.4 per cent on leather shoes from China and 16.8 per cent for those from Vietnam.

Mandelson is now recommending a five-year extension of the tariffs, which would drop to 16.5 per cent for China and 10 per cent for Vietnam.

Under EU rules, a final decision must be taken by a majority of the bloc's governments.

With an end-week deadline for imposing the definitive duties looming, the in-fighting between governments is expected to get fierce.

"This is a concrete example of the state of our trade debate on China - the fact that there are no clear answers," said an EU official.

Mandelson's paper, he said, would look at these and other dilemmas facing the EU as it struggles to update its trade strategy to new global challenges.

One major shift is the EU's decision to launch free trade negotiations with south-east Asian countries as well as India and South Korea.

The bloc had earlier shunned such deals, saying bilateral accords would distract from the more urgent need to clinch a wider WTO trade-expanding agreement.

However, the current stalemate in the WTO talks - and a rival US drive to build up a network of bilateral free trade deals - has convinced EU policymakers to look at other ways of expanding trade opportunities, especially in Asia.

The new bilateral agreements are expected to focus on the opening up of procurement markets as well as the banking and telecommunication sectors.

© 2006 dpa German Press Agency