Shoemakers spar with EU
Tan Wei

On the evening of October 12, there must have been a full moon over an alliance of Chinese shoemakers that was meeting. Howling about the European Union’s week-earlier vote to slap anti-dumping duties on shoes imported from China and Viet Nam, the voices turned from snarl to bite: They would sue.
“This news hit us badly and some companies whose businesses are mainly from Europe have been closed,” said Wu Zhen-chang, Chairman of Guangdong Chuangxin Shoe Manufacturing Co.
While suing the EU would be no easy task, the shoemakers are committed to this idea: You won’t walk all over us so easily, at least not without losing your cheap shoes.
Duty bound
Wu’s vacation ended just in time to manage a major crisis.
On the first working day after the weeklong National Day holiday, Wu returned to work answering call upon call. It was the day after the EU began to impose a 16.5 percent duty on leather shoes from China.
“Once we are levied anti-dumping duties, our production costs will increase and the clients may shift to factories in other countries or regions,” Wu said.
Already, provisional duties had been in place since April 7, levying anti-dumping duties for six months on Chinese shoes. They gradually rose from 4.8 percent to 19.4 percent.
In the meantime, foreign purchasers began shifting their orders from China to Thailand and Indonesia.
“Our original costs have been a little bit higher than theirs, and now together with extra duties, we will lose all our advantages,” Wu said.
When the duties expired October 6, the EU decided to levy two-year-long duties beginning the next day.
Critical mass decision
Enough was enough, and on October 12, Chinese shoemakers decided to make that clear.
In their special session, held along with the China Alliance in Response to EU Anti-Dumping of Chinese Footwear, they resolved to sue EU courts in the name of companies instead of the alliance.
In accordance with EU laws, alliances or chambers of commerce have no right to bring a suit to courts, although companies may do so. Legal fees would be very high-around 200,000 euros-if individual companies were to sue separately. Hence the alliance called on the 150 affected Chinese shoemakers to jointly sue the EU. As a result, every company would need to pay less than 10,000 euros.
Meanwhile, EU courts could still make different company-specific decisions, tailoring duty decisions as if individual suits were filed, according to Wu. To achieve customized verdicts would in some sense be a win because imposing the 16.5 percent across-the-board duty upon Chinese shoemakers could be labeled unfairly arbitrary itself. That’s because the EU did not carefully examine investigation materials ascertained on many companies, said Wu. Even Golden Step Industrial Co. Ltd., the only company that received special treatment under the new duty system, will also join the suit since the EU never sufficiently explained the reasons to hit it with a lower-but-still-significant 9.7 percent duty.
On October 23, the largest private shoemaker of China, Aokang Group, became the first to officially declare it would sue the EU.
“However complicated the procedures would be and however arduous the work would be, we believe that law is just and Chinese shoe makers should step forward and argue strongly for our rights on just grounds,” said Wang Zhentao, Chairman of Aokang. According to him, the only way out of the quagmire is for Aokang and other shoemakers to directly defend themselves with litigation.
What concerns Chinese business people is that the EU’s sanction on shoes seems just the beginning.
“In Brussels, it is said there will be a series of anti-dumping cases against China,” James H. Searles, an attorney for the China Alliance, told Caijing magazine. “Furniture is on schedule and it may happen by the end of this year. Germany and Italy who have strong furniture industries support investigations on Chinese companies,” he said.
Searles holds that the EU’s new decision will be watershed one for its trade policy toward China and in the future there will be more sanctions against China in other industries. The EU, after all, is concerned about its ballooning trade deficit with China and is acting more aggressively to counter it.
“Many industries in Wenzhou have felt threats from the EU and are actively taking various measures,” said Xie Rongfang, Secretary General of Wenzhou Shoes and Leather Industry Association.
Fighting to survive
It’s no wonder Chinese shoemakers are in the fight of their lives.
According to statistics released by the Chinese customs, as the largest shoe producer and exporter, China produced 9 billion pairs of shoes in 2005 and exports were valued at $17.1 billion, accounting for 53 percent of the world’s total shoes output and 60 percent of global shoes exports. The EU was China’s second largest shoes export destination, buying 14.6 percent of Chinese total shoes exports. From January to October 2005, China exported 805 million pairs of shoes to the EU with value of $2.6 billion.
However, the Chinese shoe industry is beginning to go down the drain through a whirlpool of international ire, from Spain burning Chinese shoes to the EU imposing anti-dumping duties.
“The EU’s anti-dumping duties on Chinese shoes will influence 70,000 job opportunities in the Chinese shoes industry,” said Lu Jianhua, Director of the Department of Foreign Trade of China’s Ministry of Commerce. And it’s not just employees suffering-the industry top-to-bottom will, Lu said.
By expert accounts, the average price of Chinese shoes is 8 euros per pair there. With extra anti-dumping duties, the importing price of every pair of shoes will increase more than 1 euro. The extra duties will influence 14 percent of Chinese shoes exports to the EU.
Wu holds that most European importers will not bear the tariffs as high as 17 percent, except for a tiny minority of shoes with high quality and novel designs. Most of the orders that had been given to China will be shifted to other areas. It is estimated that in the next two years, at least 70 percent of involved orders will be transferred to other Southeast Asian nations.
“Two years is long enough for European imports to nurture new supply bases and China’s original advantages will be replaced,” he said.
Local companies are already being hit hard.
Guangzhou Yunfang Shoes Trading Co. exports 500,000 pairs of women’s shoes to the EU annually, accounting for about 40 percent of its total exports. According to its General Manager Hong Guangsheng, a new order it obtained from an Italian client in April was reduced from the intended 40,000 pairs to 20,000 pairs.
“Our clients also cooperate with factories in some other countries,” Wu said. “Once we are levied anti-dumping duties, our production costs will increase and the clients may shift to factories in other countries or regions. This is an important reason for us to try our best to win the anti-dumping case.”

(The Daily Mail-Beijing Review Articles Exchange Item)

A question of honour
G. G. Khan

Profession of arms is based on ironclad customs of honor and chivalry. The code of honor, evolved and proven over centuries spawning the history of warfare, places tremendous emphasis upon the moral fiber of the officers’ corps. Only those can command the trust, loyalty and obedience of the soldiery who have unquestionable integrity and honesty. An Army whose officers don’t fulfill these exacting attributes of character soon turns into a mass of ruffians. In this contest multiple cases of commonplace thuggery, committed by the brass of the Indian Army provides an incisive insight into the rot that has set into the moral fiber of this much leaking institution.
The Central Bureau of Investigation (CBI), after a lapse of seven years, has registered a case for misappropriation against three senior officers of the Indian Army, including a major general, for a case of financial embezzlement which has acquired the sobriquet of “Coffin Scam”. It is revealing to know that the scam is only one of the twenty five questionable deals made by the Indian Army during the Kargil days which are being probed by the CBI. These probes, which relate to the transactions committed during the BJP led National Democratic alliance (NDA) regime, have been authorized by the United Progressive Alliance (UPA) Government based on the objections raised by the Comptroller of the Auditor General.
In India, much like rest of South Asia, bodies of dead soldiers are customarily dispatched to their homes in simple and inexpensive wooden caskets. Finding it opportune to make a quick buck, a clique of senior Indian officers, taking advantage of the emotive value of Kargil skirmishes, decided to turn the somber ritual into a money churning project. Obtaining approval for the import of US made aluminium caskets and body bags, these officers got into a deal with the US based supplier to provide 500 caskets and 3000 body bags at the exorbitant rate of $2500 (1.20 lac Indian rupee) and $85 (4200 Indian rupees) respectively, making the contract worth more than Rs 6 crores. The prosecution has now alleged that despite the fact that these caskets were substandard (all were leaking); the same were exorbitantly overpriced as well. Similar caskets had been earlier acquired by the UN Mission in Somalia and the US Army at the rate of $ 170 and $28 per item respectively. To rub salt into the injury, the accused officers not only committed procedural irregularities to benefit a particular firm but their assessment of timings was so shoddy that the caskets / body bags began to arrive only in February 2000 when the conflict had been wrapped up months earlier. According to the prosecution the transaction, even if its questionable necessity is accepted, incurred a lost of Rs 89 lacs to the state exchequer.
Among the various scandals plaguing the Indian Army, Coffin Scandal shares spotlight with another equally ignominious case of fraud involving top brass of the Indian army – the Cereal Scam. According to media reports, Indian army, on 18 July 2006, has announced action against ten senior officers for committing fraud while procuring dry rations for the lower ranks; court martial proceedings have been ordered against Lieutenant General S K Sahni, the Director General of Supply and Transport while administrative action has been ordered against Major General S Dahiya and eight other officers. These officers, as per the findings of a Court of Inquiry, stooped to lowest form of conduct by making money at the cost of health of their under command troops. They conspired to procure one thousand metric tonnes of Massor Dal which was adulterated and unfit for human consumption. In fact, by the time the fraud was discovered, a major chunk of this unfit cereal consignment had been distributed to and consumed by manpower in various units of the Western Command. The conclusion of contract for rations unfit for human consumption apparently didn’t satiate culprit’s lust for money; they concluded a fresh agreement for the same consignment with the supplier at a higher rate while cancelling an earlier contract ,causing a loss of four crore rupees to the exchequer. The welfare of one’s command remains a top priority with any commander and involvement of such high ranking officers in callous deals, like the one reflected by the Cereal Scam, is reflective of the poor state of integrity, discipline and man-management in the Indian Armed Forces.
Indian Army’s lengthening Roll of Dishonour also includes Major General Gur Iqbal Singh, who was found running a ‘side business’ of selling liquor meant for consumption by Indian troops as part of their rations, in open market. The General now faces court martial on charges of misappropriating government stores and for acts prejudicial to the good order and military discipline. Last month also witnessed emergence of the five years old Tehelka sting case in which journalists acting as arms dealers caught on film senior officers of the Indian Army receiving illegal gratifications. Indian Army Chief confirmed the award of a court martial to Brigadier Iqbal Singh; who was dismissed from service and was awarded rigorous imprisonment of two years for accepting bribe and gratifications in the form of wine and women and for maintaining unauthorized contacts with foreign nationals.
The weakening moral fiber of the Indian brass and its callousness to welfare related issues is reflected not only in its unbridled lust to acquire fortunes at the cost of welfare of their under-command troops but also through incidents of mistreatment meted out to retired veterans. Recently, a retired and disabled captain of the Indian Army threatened to do the unthinkable; threatening to extinguish the ‘eternal flame’ at the Amar Jawan Jyoti (AJJ) at India Gate in New Delhi. The captain went to this extreme to draw attention to the withdrawal of pension amounting to Rs 3.62 lacs, from his bank account by the Indian Government in all violations of the banking rules and without his permission and prior knowledge. This incident closely followed in the wake of another occurrence involving disgruntled Indian war veterans. On 22 Mar four retired and disabled Indian captains burnt their artificial limbs in front of the AJJ. These veterans were demanding restoration of their pension from the Indian Army.
The episodes of moral turpitude in the Indian Army, at the highest echelons of command structure, are indicative of the loosening bonds of discipline and of the declining faith in the time proven values of honesty and integrity. According to observers the rot is caused by the long involvement of the Indian Armed Forces in the counter insurgency operations, particularly in the IHK, where unbridled powers bestowed upon the commanders and troops, through draconian legislatures, have inculcated a culture of fake encounters and claiming sham operational accomplishments. While the Indian brass is indulging in monetary corruption the malaise is reflected among lower ranks in the form of desertions, insubordinations, killing of colleagues in cold blood and in mushrooming figures of suicide cases. These are symptoms of the deep rooted disease calling for a painful remedy. But the question remains; Is Indian Army ready for this exorcising exercise?


Regime change in US
Claude Salhani

THE outcome of Tuesday’s midterm election in the United States is as much a victory for the Democrats as it is a vote of no confidence for the Bush administration. It is in fact a censure of the Bush government and what is largely perceived as a failed policy regarding the Iraq war, the economy and the government’s abuse of power. This political shakeup amounts to a demand by the American people for regime change in... Washington. The Republicans who controlled the two chambers of Congress lost 28 seats to the Democrats in the House, giving them the majority in the lower chamber. As of Wednesday morning the Democrats had gained four Senate seats splitting the upper chamber 49-49, with two states still not called. To dominate the Senate, Democrats would need to win both remaining Senate seats.
The loss of confidence in the Bush administration’s ability to handle the Iraq war was a major contributor to the defeat of the Republican Party. Interestingly, disappointment in the administration’s performance was not only manifested from the expected opposition, such as Democrats and Liberals, but from once-ardent Bush supporters, too. Interestingly, just days before Election Day a number of hard-line neoconservatives, including a one-time Pentagon adviser and a main architect of the Iraq war spoke out against the way the US was conducting the war in Iraq, calling it a “disaster.”
In an interview to Vanity Fair magazine Richard Perle, said if he had been able to see how the war would turn out, he probably would not have pushed for the removal of Saddam Hussein. “I think if I had been delphic, and had seen where we are today, and people had said, ‘Should we go into Iraq?,’ I think now I probably would have said, ‘No, let’s consider other strategies for dealing with the thing that concerns us most, which is Saddam supplying weapons of mass destruction to terrorists,” Perle is quoted by David Rose in the Vanity Fair article.
Perle added: “The decisions did not get made that should have been. They didn’t get made in a timely fashion, and the differences were argued out endlessly.” Responding to the magazine’s accusations, a White House spokesman said, “The president has a plan to succeed in Iraq....” Campaigning for the Republicans right up to Election Day, the president kept repeating the same line, that he has a “plan” for Iraq. Well, if indeed Bush has a plan that would win the war, just what is he waiting for? But Bush loyalists, including Perle and other former White House insiders cited in the Vanity Fair interviews, claim they were quoted out of context and that the magazine is playing politics, hoping to influence the elections.