UPDATE: EU Seen Extending China,Vietnam Shoe Duties By 15 Months

The European Commission is likely to propose a 15-month extension of controversial duties on shoes made in China and Vietnam, European Union diplomats said, despite broad opposition from major shoe corporations and many European governments.

The commission, the E.U.'s executive arm, is expected to argue that Chinese and Vietnamese shoe companies are clearly shipping their products to the E.U. at below market prices - especially compared with the price of shoes made in other developing countries such as India, Brazil and Indonesia.

The commission is also expected to argue that the duties, which are 16.5% on Chinese and 10% on Vietnamese shoes, have cost European consumers only EUR1.50 per pair of shoes.

Global corporations such as Adidas (ADS.XE) and one of Adidas' main suppliers, the giant Hong Kong-based shoe manufacturer Yue Yuen Industrial Holdings LTD. (0551.HK), have fought hard to end the duties, which were put in place in October 2006 and are set to expire last year.But European shoemakers in June 2008 asked the commission to extend the duties, and the commission agreed to examine the issue.

The commission's proposal has been circulated to other parts of the commission and will be distributed to the shoemakers and the large shoe importers Friday, E.U. officials said.

It will be discussed at a meeting of E.U. trade experts in November and must be approved by the European Council. If the duties are cleared they will come into force at the beginning of January 2010.

It's unclear whether the council will approve an extension of the duties. European shoemakers tend to be small and medium-sized businesses, concentrated in Italy, Portugal, Romania, Spain and Poland. Those governments and a few others will support extending the duties, but many other E.U. countries oppose them.

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