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Business
Print Edition> Business
UPDATED: December 10, 2012 NO. 50 DECEMBER 13, 2012
A Complete Victory?
While continuing to fight trade protectionism, Chinese companies must also enhance the competitiveness of their products
By Lan Xinzhen
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CELEBRATING: An Aokang store in Yichang, Hubei Province, displays an electronic sign announcing its victory in an anti-dumping lawsuit against the EU (CFP)

The European Court of Justice (ECJ) on November 18 ruled in favor of Zhejiang-based shoe manufacturer Aokang against anti-dumping claims by the European Union (EU), ending a six-year long battle.

Following the verdict, some in the media said that since the EU is China's second largest export destination for shoes, the victory has provided a legal precedent for Chinese shoemaking enterprises in future anti-dumping cases and other trade disputes.

For the media, the win provided hope for Chinese manufacturers confronted with protectionism.

Zhang Li, associate researcher at the Chinese Academy of International Trade and Economic Cooperation (CAITEC), said she could understand the media's ecstatic tone. Because the United States and the EU adopt frequent trade protectionism measures against Chinese products, every victory on the Chinese side is worthy of celebration.

Now that the party's over, the media should reflect on whether some Chinese industries can sustain their competitive edge and seize the capacity to advance their industrial development.

Aokang's victory

Since the 1980s, Chinese-made leather shoes have been sold to EU countries, and their sales volume has been increasing. In 1995, some European countries came together to impose an "import quota" on Chinese-made shoes in the name of protecting their domestic shoemakers and safeguarding prices.

After China's accession to the WTO in 2001, the quota limit was dropped since no import limits could apply to member nations. The EU then readjusted its policy and launched anti-dumping investigations against Chinese-made shoes.

In October 2006 the European Commission (EC) began to impose a two-year 16.5-percent duty on leather shoes originating from China.

Wang Zhentao, President of Aokang Group Co., said the anti-dumping duty had led to unprofitable outcomes for Chinese shoemakers in the EU market. Most of the 1,200 affected Chinese companies pulled out of the EU market. Five Chinese shoe manufacturers, headed by Aokang, brought the EC to the European General Court (EGC).

In April 2010, the EGC dismissed the case. Four of the companies felt it would be too difficult to win on appeal and pulled out. Only Aokang decided to appeal to the ECJ.

After the anti-dumping duty expired in 2009, the EU launched its "sunset review" and decided to extend the anti-dumping duty for another 15 months until March 31, 2011.

According to figures from the Ministry of Commerce (MOFCOM), from 2006 to the expiration of the EU's anti-dumping duty, exports of Chinese shoes to Europe declined by more than 20 percent, resulting in a direct loss of 20,000 jobs.

The ECJ's verdict, which overturns the EGC's earlier ruling, says Aokang will receive 5 million yuan ($794,913) in legal fees from the EC. Aokang's export and import partners can also receive a refund of duties collected by the EU over the last six years.

Wang Hailong, an Aokang spokesman, said at a press conference the day after the ruling that the company's litigation expenses during the past six years amounted to 3 million-4 million yuan ($476,948-635,930). The amount of duty refunded to European importers is not yet clear and requires further clarification.

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