L 24/8 Official Journal of the European Union 27.1.2005 COMMISSION REGULATION (EC) No 117/2005 of 26 January 2005 introducing Community surveillance of imports of certain footwear products originating in certain third countries THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 3285/94 of 22 December 1994 on common rules for imports and repealing Regulation (EC) No 518/94('), and in particular Article 11(2) thereof, Whereas: The quota system on footwear products set out in Council Regulation (EC) No 427/2003 of 3 March 2003 on a transitional product-specific safeguard mechanism for imports originating in the People’s Republic of China and amending Regulation (EC) No 519/94 on common rules for imports from certain third countries (?) expired on 1 January 2005. On 7 December 2004, the Commission was informed by some Member States that it would be appropriate to impose surveillance measures on footwear products pursuant to Regulation (EC) No 3285/94. The Community footwear industry is largely composed of small and medium-sized enterprises, most of which are located in regions with few other sources of employment. It is therefore vulnerable to competition from low-priced imports originating in particular in the People’s Republic of China. In response to this import competition, the Community footwear industry has, in recent years, undergone an extensive restructuring by concentrating its output on more up-market products which are also the products that have been under quota. These products represent approximately 85% of production in the Community footwear industry. This restructuring has entailed a () OJ L 349, 31.12.1994, p. 53. Regulation as last amended by Regu- lation (EC) No 2474/2000 (OJ L 286, 11.11.2000, p. 1). () OJ L 65, 8.3.2003, p. 1. Regulation as amended by Regulation (EC) No 1985/2003 (OJ L 295, 13.11.2003, p. 43). marked reduction of capacity and workforce. Despite these efforts, the Community footwear industry continues to lose production and market share owing to cheap foreign imports. Over the period 2000 to 2003, imports of footwear products originating in the People’s Republic of China not subject to quotas increased sharply both in absolute terms as well as in terms of share of the Community market, with prices that were substantially lower than the prices of equivalent products manu- factured in the Community. The average increase in imports was 59% between 2000 and 2003 and the average difference in prices was 21 %. Given that prevailing market conditions for all footwear products are the same, it is expected that the recent liberalisation will lead to a similar substantial increase of imports. On the basis of recent trends in imports of footwear, the result of the 2005 removal of quotas could lead to a doubling in imports in the short term, with a likely consequent loss in market share for the Community industry of 6% and a loss of 17 000 jobs. A threat of injury to Community producers for the purposes of Article 11 of Regulation (EC) No 3285/94 can therefore be deemed to exist. This likely impact is so significant that the interests of the Community require that imports of certain footwear products of Chinese origin should be subject to prior Community surveillance in order to provide statistical information permitting rapid analysis of import trends. The footwear concerned, mainly medium to high quality footwear, is that for which significant production still remains in the Community and can be considered sensitive for that reason. Prior surveillance by means of an automatic import licensing regime applicable until 31 January 2006 would provide the fastest means of obtaining a clear picture of the early effects of the removal of these quotas as any retrospective system takes time to provide meaningful data. It is also appropriate, in order to obtain an overall view of the trends in imports of footwear, to establish a retro- spective customs-based surveillance system for imports of all footwear from all sources. This includes footwear requiring to be made subject to prior surveillance. When the retrospective system of surveillance is fully operational the prior surveillance can be terminated, at the latest by 31 January 2006.