A World Trade Organization panel largely backed China on Friday in a complaint about European Union import duties on Chinese footwear, dealing a partial victory also to European importers and retailers.

In a ruling, the panel told the European Union to bring its method on calculating anti-dumping duties into conformity with WTO rules and said the bloc had acted inconsistently with WTO law.

But it said there was no need for the EU to change the disputed tariffs because they had already expired. It also rejected the bulk of China's claims on behalf of individual Chinese shoe makers and some of its more specific complaints.

The case is the second brought by China against the EU at the WTO. In July, China won a similar victory against EU duties on what Europe said were unfairly cheap Chinese screws and bolts.

In that case, a panel condemned the way Europe assesses duties against countries it deems not to be market economies, such as China, Vietnam and Cuba.

The EU's controversial launch of duties on Chinese and Vietnamese-made leather shoes in 2006 marked deep divisions between Europe's manufacturing South and retail-heavy North. Spanish and Italian shoemakers said they could not compete against cheap Asian shoes while importers and retailers argued high-street shoppers would end up paying more for shoes.

On Friday, the European Footwear Alliance, which represents sporting goods giants such as Adidas , Puma

Ecco and Hush Puppies, hailed what it called China's success and demanded EU compensation payments.

The EU calculated and imposed the anti-dumping duties in a way which impermissibly discriminated against the vast majority of Chinese suppliers solely because they were Chinese, thus violating the cornerstone non-discrimination provision of the WTO Agreement, the alliance said in a statement.

The report highlights ... the EU's general lack of transparency, it said. EFA requests that the EU implement the WTO panel findings and reimburse importers those anti-dumping duties which the EU impermissibly collected over the past five years.

Both China and the EU claimed victory in the WTO's ruling on Friday.

China welcomed as a vindication the panel's rebuke of the way Europe effectively applies a single anti-dumping duty to a country rather than to individual firms if it doesn't consider that country to be a market economy -- unless the firms can prove that they are independent of the state.

China considers the panel report to be a contribution toward consolidating the rules-based system that all WTO Members have pledged to foster, it said.

In this spirit China looks forward to the full compliance of the Panel's recommendation by the European Union with regard to the IT (individual treatment) practice. ... China expects that the European Union will not repeat the violations of the Anti-Dumping Agreement found by the Panel.

An EU spokesman said the panel rejected almost all of the procedural and substantive claims advanced by China.

The panel considered the original and the review investigations conducted by the EU in the footwear case to be legal under WTO law, with the exception of few issues. And even with respect to these issues, the EU faces no implementation obligations, as the anti-dumping duties on Chinese footwear expired on 31 March 2011, EU trade spokesman John Clancy said in a statement.

Either side can appeal the ruling within 60 days.

(Reporting by Tom Miles and Juliane von Reppert-Bismarck in Brussels; editing by Stephanie Nebehay and Myra MacDonald)

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