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EU Importers Advance Attack on EU’s Re-imposition of Footwear Measures

The never-ending dispute regarding the anti-dumping duties imposed on certain footwear originating in mainland China and Vietnam, already going on for more than a decade, remains unresolved.

Between October 2006 and March 2011, through Regulations 1472/2006 and 1294/2009, the European Commission imposed anti-dumping duties on imports of certain footwear with uppers of leather originating in mainland China and Vietnam. Despite the legal victories against the imposition of the anti-dumping duties before the EU Court of Justice – the annulment of the regulations for five exporting producers of footwear in 2012 (cases Brosmann and Aokang) and the invalidation of the regulations in 2016 (Joined Cases C & J Clark International and Puma) – many EU importers of footwear are still waiting for refunds of the previously collected anti-dumping duties.

The European Commission has reinforced its refusal over repayment of the anti-dumping duties on footwear through several regulations, by which it circumvents the refund of the duties as ordered by the EU Court of Justice.

In February 2016, by means of the publication of Commission Implementing Regulation 2016/223, the Commission announced that it would rectify the inconsistencies of the anti-dumping duties as identified by the EU Court of Justice. In order to do so, the Commission ordered the national customs authorities to forward all requests for repayment to the Commission and to, in the meanwhile, refrain from deciding on any claims for repayment of the anti-dumping duties. Regulation 2016/223 was challenged by two EU importers of footwear, Deichmann and Clarks, through a request for a preliminary ruling and an action for annulment respectively.

Since August 2016, on the basis of the requests for repayment which were forwarded by the national customs authorities, the European Commission has adopted numerous regulations through which it retroactively re-imposed the anti-dumping duties on imports of the footwear covered (e.g., Commission Implementing Regulations 2016/1395, 2016/1647, 2016/1731 and 2016/2257). Such retroactive re-imposition is always done for a number of named producers and, logically, impedes the repayment of the previously collected duties.

Unwilling to give in to the EU’s reluctance to refund the anti-dumping duties, EU importers of footwear have filed numerous lawsuits against the regulations of the European Commission, at both the EU and the national level.

The legal battle against the retroactive re-imposition of the anti-dumping duties started in November 2016 when Puma, Timberland and Clarks filed an appeal against the EU’s actions at the EU General Court. In addition, through an action filed at the UK tax tribunal, Clarks asked the EU Court of Justice if the steps taken by the European Commission and its decision to re-impose the duties was legal. These questions were referred to the EU Court of Justice on 28 November 2016.

EU importers of footwear are now advancing their attack on the re-imposition of the anti-dumping duties. On 7 December 2016, Clarks filed a direct action at the EU General Court, submitting that the European Commission wrongly re-imposed the duties on Vietnamese shoes. This appeal is similar to its previous appeal concerning shoes from mainland China. Clarks argues, amongst other issues: that the European Commission failed to take the necessary steps to implement the ruling of the EU Court of Justice in refunding the duties; that it is illegal to retroactively impose the anti-dumping duties; and that the European Commission failed to assess whether the imposition of the duties was in the interests of the EU.

Timberland, in turn, asked the Dutch tax court to seek guidance from the EU Court of Justice on whether the re-imposed duties are legal. This question was referred to the EU Court of Justice on 7 December 2016. The Dutch court, in addition, asked whether customs authorities have to pay interest on the amount of the collected anti-dumping duties if the EU Court of Justice were to find that the duties should be refunded to the EU importers.

As long as all the repayment requests have not been covered, the European Commission will continue to adopt regulations through which it retroactively re-imposes the definitive anti-dumping duties on imports of the involved footwear. As a result, Hong Kong traders will likely see more legal actions from EU importers of footwear, which are expected in the near future.

The pending cases before the EU courts will address interesting legal issues, such as the possibility of the European Commission to retroactively impose anti-dumping duties after the expiry of the initial measure, and the obligation of customs authorities to pay interest when refunding anti-dumping duties.

Such systemic issues are likely to be of relevance for Hong Kong and mainland Chinese traders exporting footwear to the EU.

Content provided by Picture: HKTDC Research
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