UPDATE: EU Officials Expected To Oppose Duties On Asian Shoes

European Union trade officials are expected to oppose a proposal by the European Commission to extend controversial duties on shoes imported from China and Vietnam, E.U. diplomats said Wednesday.

Officials representing the 27 E.U. governments are gathering Thursday in Brussels to discuss the proposal, which would extend the duties by 15 months. There are likely to be 15 or 16 countries opposing the plan by the commission, the E.U.'s executive arm, diplomats say.

The debate is pitting European countries where shoemakers are concentrated--mainly Italy, Portugal, Romania, Spain and Poland--against countries such as the U.K. and Sweden that tend to oppose trade tariffs and where shoe production has largely moved overseas.

Denmark, one of the staunchest opponents of extending the duties, said the added costs of the tariffs for consumers far outweighed their benefits to shoemakers.

"This kind of unjustified taxation of European importers and consumers will not get my support," said Lene Espersen, Danish Vice Prime Minister and minister for Economy and Business Affairs.

If, however, the proposal is rejected by the committee Thursday as expected, it may still be sent to the European Council, where ministers from the 27 countries will vote on it. The outcome of that vote could be different as supporters of extending the duties could persuade other countries to change their votes, diplomats say.

The commission's proposal claims that Chinese and Vietnamese shoe companies are dumping their products into the E.U. at below-market prices. The duties, which have been in place since 2006, would continue to be 16.5% on Chinese shoes and 10% on Vietnamese shoes under the commission's proposal.

Global corporations, such as Adidas (ADS.XE) and one of Adidas' main suppliers, Hong Kong-based shoe manufacturer Yue Yuen Industrial Holdings LTD. (0551.HK), have fought hard to end the duties. But European shoemakers in June 2008 asked the commission to extend the duties, and the commission agreed to examine the issue.

The duties apply to leather footwear, which excludes most sneakers.

Over the last decade, Chinese and Vietnamese exporters have chipped away at the E.U. market share of European shoemakers, which has decreased to 40%-45% from around 60% in 2001. Supporters of extending the duties say they have prevented even more market share losses by European shoemakers.

The case has been a top priority for the Chinese government, as millions of people in China are employed in the footwear industry. About 250,000 Europeans work in the European leather goods industry, most of which are employed making shoes.

-By Matthew Dalton, Dow Jones Newswires; [phone]; [e-mail]