YUEIY Yue Yuen Industrial Holdings Ltd (PK)

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.

If, however, the proposal is rejected by the committee Thursday as expected, it may still be sent to the European Council, where senior government officials from the 27 countries will vote on it. The outcome of that vote could be different as Italy and other 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.

-By Matthew Dalton, Dow Jones Newswires; +322 741 1487; matthew.dalton@dowjones.com

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