European Commissioner for Trade Peter Mandelson said that the deep split within the 25-nation bloc this year on calls to impose punitive duties on cheap Chinese shoes was proof that the EU needed to overhaul its anti-dumping legislation.

Mandelson's move follows rising global criticism of the EU's rules for imposing fines on exporters deemed to be selling goods at below cost. Asian and Latin American states -- often targeted by such action -- have said the legislation is protectionist.

European manufacturers, however, backed by governments in Italy, Spain and France, argue that the EU rules are not tough enough to shelter them from unfair competition.

Mandelson insisted that the EU owed no apologies for defending itself against "trade cheats."

"Acting against unfair trade is an essential political and economic part of defending free trade and European competitiveness and people's jobs," he said.

Rapid changes

However, given rapid changes in the global economy, the EU needed to modernize and update its trade defense rules to reflect new realities, he said.

Mandelson said he was launching a wide-ranging public consultation on how best to overhaul EU anti-dumping rules. Talks would be held with European industry, but also with consumers and retailers who oppose such price-hiking duties.

EU officials say a range of new developments need to be discussed during the consultations, including the fact that a growing number of European companies produce goods outside the EU and then import them into the bloc.

European firms were also outsourcing some steps in the production process, or operated supply chains that stretch beyond the EU market, they added.

"These changes challenge familiar understandings of what constitutes EU production and the EU's economic interests," Mandelson said.

Defense tools

The EU trade chief denied that he wanted the EU to use trade defense tools less often or to weaken the current regulation. Instead, the focus was on making sure anti-dumping legislation was "fit for its purpose," he said.

"We are not going to use our trade defense instruments improperly to protect EU business from low-cost competition that is legitimate and fair,' said Mandelson. However, those engaging in unfair trade would be punished, he warned.

The period of EU consultations on revamping the trade measures will last until the end of March 2007.