Anti-anti-dumping

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It is not just all good things that come to an end. Some bad ones do too. On Thursday, European Union trade officials rejected a plan to extend the “anti-dumping” duties levied on shoe imports from China and Vietnam. Even so, the episode points up the opaque and arbitrary nature of EU trade laws.

The duties, imposed for two years on imports sold below the price in the exporting country’s home market, began in 2006 after lobbying by producer countries such as Spain and Italy. As the end-date approached the European Commission was pressed to keep the duties for a further 15 months. The Commission should have stood up to this lobby: it did not.

Anti-dumping duties are generally a bad idea. There may a case for protecting an industry with strategic importance. But shoes are less strategic even than yoghurts. If Beijing wants to subsidise European consumers’ shoe habits, by sending footwear halfway around the globe, it should be able to do so. Shoemaking is not an industry with high barriers to entry, nor one where predatory pricing delivers an unfair competitive advantage.

There are other problems with anti-dumping duties too. They encourage retaliation, moving international trade further in the wrong direction. The protection afforded by anti-dumping measures also encourages producers to focus on pleading or arguing for its continuance rather than concentrating on how to become more competitive themselves, perhaps by moving to the top end of the market or even by becoming more responsive to customers’ needs.

Though Thursday’s decision was the right result, the process by which it was achieved was a reminder of the vagaries of the EU approach to anti-dumping actions. Like most members of the World Trade Organisation, the EU allows its policymakers too much discretion and does not insist on enough transparency. This produces a regime that is neither clear nor certain.

Peter (now Lord) Mandelson sought to reform the anti-dumping laws while he was trade commissioner, but was unable to make headway. Since the credit crunch has caused a fresh outbreak of economic nationalism among some EU countries, now is probably not the best time to seek to revive reform plans. Instead, EU national governments should make sure that if the Commission again seeks to appease the protectionists and tries to extend anti-dumping next month then their ministers reject it as officials did.

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