BEIJING, Feb. 24 -- China is actively taking measures to deal with the prior import licensing and inspection mechanism implemented by the European Union (EU) on China's footwear exports beginning from February 1.

    Thousands of Chinese shoemakers will be co-ordinated by a special team under the China Leather Association dealing with trade conflicts. It will collect information from them in the one year in which the mechanism is implemented.

    "We will inform China's shoe making enterprises with the latest information from the EU and consult with the government on countermeasures," said Wei Yafei, an official from the association.

    China's Ministry of Commerce has also put shoe exports under close supervision.

    Wei said that both the Chinese Government and the industry association may consider adopting some restrictive measures similar to those imposed on textile exports.

    China now levies export duties from textiles, and major textile makers have established six panels to strengthen self-discipline in the industry and oversee the exports.

    Since February 1, the European Union has required footwear importers to apply for a licence from governments of any EU member countries before Chinese shoes can enter the EU market.

    The newly implemented mechanism, which covers all footwear under quotas before 2004, is scheduled to last one year from February 1 this year to January 31, 2006.

    So far, the German and British governments have submitted documents to China about how to apply for permits in those countries. And similar documents are expected to arrive soon from other European countries.

    Although no detailed restrictions were announced, experts predicted this procedure would extend the time of declaration and time of detention, thus increasing costs for China's footwear exporters to a certain extent.

    "Since it is a slack season for shoe exports, the effects will not be obvious within one or two months," said Wei.

    This regulation echoed calls from some European countries, including Italy, Spain, Portugal and Poland, to launch an anti-dumping investigation against Chinese footwear.

    Implementation of the new mechanism would not have a major impact on China's shoemakers in the short term as applying for import licences would be easier than getting quotas, said sources from the China Chamber of Commerce for the Import/Export of Light Industrial Products, Arts and Crafts.

    However, domestic shoemakers should remain cautious, warned Wang Jin, head of the chamber's shoe branch.

    With the inspection system, the EU, if finding a big increase of Chinese shoes into its market, would take other measures like special safeguards and anti-dumping to protect its own businesses.

    "That will be a heavy blow to China's shoemaking industry," Wang pointed out.

    China currently has more than 7,000 shoemaking enterprises, producing an annual average of more than 6 billion pairs of shoes, accounting for 53 per cent of the global total. However, a huge amount of those shoes are OEM (original equipment manufacturing) products for international brands.

    Due to the lack of their own competitive products, Chinese shoemakers often resort to price cuts.

    That often results in falling profits and increased risks of anti-dumping measures.

    The EU has long been concerned about the threat posed to EU companies from cheap Chinese imports.

    The conflict intensified last autumn, when it was announced that the lifting of all shoe quotas would take place at the beginning of this year. Enditem

(Source: China Daily)