China to seek WTO arbitration over potential levy on ?1.3b worth of shoe exports China's Ministry of Commerce will take the European Union to the World Trade Organisation arbitration process if the EU decides next month to slap anti-dumping duties on Chinese leather shoes, according to a lawyer representing about 25 shoe manufacturers in China and Vietnam. 'Senior ministry officials told me they will definitely take the EU to WTO,' said Edmund Sim, a partner at US law firm Hunton & Williams. This is the biggest EU anti-dumping case against China, affecting 174 million pairs of Chinese leather shoes worth Euro1.3 billion (HK$12.94 billion) annually and 103 million pairs of Vietnamese leather shoes worth Euro845 million annually, according to EU data. Mr Sim estimated about 30 per cent of the Chinese shoes are linked to Hong Kong businesses, whether as Hong Kong-invested shoe manufacturers or traders. Eddie Lam Kwong-tak, chairman of the footwear group of the Federation of Hong Kong Industries, said the anti-dumping measures will affect about 18 Hong Kong shoe manufacturers and 50,000 workers. The 25 EU member states are scheduled to vote on October 5 whether to impose five-year anti-dumping duties on Chinese and Vietnamese shoes with leather uppers before the six-month preliminary anti-dumping duties expire on October 6. 'The outcome will be very close,' Mr Sim said. The EU is evenly divided between northern European states opposed to anti-dumping duties and southern European states with sizeable shoe industries supporting it, he said. The vote could be decided by a few swing states such as Portugal and Austria, he added. Beijing is displeased by what it perceives as the arbitrary and nontransparent manner the EU anti-dumping proposals were changed in the past few months, Mr Sim said. An anti-dumping measure similar to a quota system was rejected in July. Last month, a plan to impose 16.5 per cent duties on Chinese leather shoes and 10 per cent on Vietnamese leather shoes also failed to win the majority backing of EU members. This month, Austria proposed one-year duties, which were also rejected. The latest proposal to be voted on October 5 is five-year duties of 16.5 per cent on Chinese leather shoes and 10 per cent on Vietnamese leather shoes. If the matter goes to arbitration, 'the Ministry of Commerce will argue that honest companies are being treated the same as dishonest companies,' said Mr Sim. Mr Lam complained honest Hong Kong manufacturers would suffer anti-dumping duties, because EU officials have discovered some mainland companies resorting to underhanded methods to dump cheap Chinese shoes in Europe. He cited his trip to Poland with some Hong Kong shoe manufacturers last year, when they were approached by mainland Chinese offering 'customs services', claiming they could falsely declare women's shoes costing Euro5 per pair as children's shoes costing Euro2 per pair. 'These Chinese lived in Poland for a long while. They had connections and could pull strings,' said Mr Lam.