China is responding to the import licensing and inspection mechanism implemented by the EU at the start of this month on Chinese footwear exports.

Thousands of Chinese shoemakers will be coordinated by a special team under the China Leather Association dealing with trade conflicts. It will collect information over the year that the mechanism is in place.

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

The Ministry of Commerce has also put shoe exports under close supervision.

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

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

Since February 1, the EU has required importers to apply for a license from any one of its member countries before Chinese-made shoes can enter their market.

The new mechanism, which covers all footwear subject to quotas before 2005, is scheduled to last until January 31 next year.

So far, the German and UK governments have submitted information about how to apply for permits, and similar documentation is expected soon from other EU states.

Although no detailed restrictions were announced, experts predicted this procedure would extend times of declaration and detention, thus increasing costs for Chinese exporters.

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

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

According to the China Chamber of Commerce for the Import/Export of Light Industrial Products, Arts and Crafts, the impact of the new mechanism should be minimal in the short term, since applying for import licenses would be easier than dealing with quotas.

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 measures to protect its own businesses.

"That would be a heavy blow to the shoemaking industry," Wang pointed out.

China currently has more than 7,000 shoemaking enterprises, producing an annual average of over 6 billion pairs of shoes, accounting for 53 percent 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, which often result in decreased profits and increased risks of anti-dumping measures.

The EU has long been concerned about the threat posed to European producers from less expensive Chinese imports.

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

(China Daily February 24, 2005)