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BBC News - October 4, 2006 Imports of leather shoes from China and Vietnam to Europe will continue to face steep punitive tariffs, under a deal reached by EU governments on Wednesday. by Theo Leggett In future, imports from China will face tariffs of 16.5%, and imports from Vietnam will face a 10% levy. The agreement is a triumph for Italy, which claims that unfair competition from manufacturers in both countries is driving its own shoe producers out of business. But retailers have responded angrily, and claim that consumers will end up paying more for their footwear. Dumped The quantity of shoes imported from China and Vietnam has risen dramatically over the past five years. Low manufacturing costs in both countries mean they can be produced very cheaply, making them very attractive to retailers. However some European manufacturers believe there is more to it than that - and that these imports are being sold at unrealistically low prices. They claim that their rivals in China and Vietnam receive government subsidies which enable them to sell shoes abroad for less than the cost of making them, a process known as dumping. The European Commission takes a similar view. Earlier this year it said there was "compelling evidence of serious state intervention in the leather footwear sector in China and Vietnam". Its response was to introduce emergency tariffs on imports of leather shoes, to protect European manufacturers from unfair competition. Two-year tariff But those tariffs were only temporary - and for the past few weeks EU governments have been arguing about whether or not to introduce more permanent restrictions. Italy has led the calls for tariffs to be maintained. It has a well-established shoemaking industry, but fears that competition from East Asia could lead to the collapse of hundreds of small businesses. Italy's international trade minister, Emma Bonino, says that thousands of jobs have already been lost in the sector because of cheap imports. Other countries such as Spain, France, Poland and Portugal have backed its stand. But the duties were opposed by a large number of member states - including Germany, Sweden and the UK who saw them as an unwelcome barrier to trade. Retail fury Wednesday's compromise deal means that the new tariffs will enter into force for just 2 years, and not the five years recommended by the Commission. Italian officials said that the agreement fell short of what they had been looking for, but insisted they were broadly satisfied with the outcome. "This is not the ideal solution, but it is a good solution, which is heading in the right direction," said one. But retailers were furious. "This is a seriously disappointing day for advocates of free trade," said Alisdair Gray of the British Retail Consortium. "These measures won't save a single job in the European Union. People will just start buying goods from other low-cost countries like India and Sri Lanka. "It just means more pain for retailers and possibly higher prices for consumers." There was a similar reaction from Horst Widman, president of the Federation of the European Sporting Goods Industry. "Today's decision hurts competitiveness, growth, employment and consumer welfare while helping no-one," he said.

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