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Court Guts EU’s Duty on Asian Leather Shoes

(CN) - Lawmakers in the EU did not fully analyze market conditions in China and Vietnam before imposing an anti-dumping duty on leather footwear made in those two nations, the European Court of Justice ruled Thursday.

In 2006, EU lawmakers set an anti-dumping duty on leather footwear made in China at 16.5 percent and 10 percent for shoes made in Vietnam.

Years later, U.K.-based retailer Clarks and Germany-based Puma both asked for repayment of the anti-dumping duties they had paid, arguing the regulation was invalid. Clarks sought a refund of $67 million, while Puma said it was owed $5.7 million.

Customs authorities in Britain and Germany rejected both companies' claims, leading to lawsuits. Both the British and German courts hearing the cases also had doubts about the validity of the regulation and asked the European Court of Justice to weigh in.

In a 21-page preliminary ruling issued Thursday, the Luxembourg-based high court agreed the EU Council and European Commission had not looked closely enough at market conditions for exporters in China and Vietnam before imposing the anti-dumping duty.

Since both China and Vietnam are members of the World Trade Organization, lawmakers and the commission had an obligation to analyze whether market economy conditions there apply to the producers in question so the producers are treated in the same way as others in their sector.

While the commission has latitude to make its decision based on a sampling in cases where the number of producers in the exporting nation is large, EU law requires it to also rule on individual claims for market economy treatment separately and outside its decision based on sampling - something that did not happen, the high court said.

The court also said that the commission and council have an obligation to set anti-dumping duty rates for each exporting producer unless individual treatment is impractical. While EU lawmakers have some wiggle room in non-market economies like China and Vietnam, the court said they must set individual rates when exporting producers ask for individual treatment.

Since the council and commission did not respond to the requests for individual treatment, the EU court said the anti-dumping duty is invalid on that point as well.

The EU court tossed the case back to the British and German courts for a final ruling in keeping with its opinion on the matter.

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