EU ANTI-DUMPING LAWSUIT AGAINST VIETNAM - WHAT CAN BE LEARNT FROM THE FOOTWEAR CASE

EU ANTI-DUMPING LAWSUIT AGAINST VIETNAM - WHAT CAN BE LEARNT FROM THE FOOTWEAR CASE

Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 EU ANTI-DUMPING LAWSUIT AGAINST VIETNAM - WHAT CAN BE LEARNT FROM THE FOOTWEAR CASE? ACKNOWLEGEMENTS First and foremost, I would like to express my special thanks to my supervisor, Phan Thi Hien Giang, MSCs., for her professional and inspirational suggestions, corrections and advice in bringing this thesis to completion I am also grateful to Hanoi Foreign Trade University, especially those teachers at the English Faculty, for giving me the opportunity to study in such an academically stimulating program in Bachelor of Business English The course has provided me with comprehensive knowledge and useful skills in business and foreign trade so that I am able to fulfill this thesis and have the courage to embark on the challenging journey of life-long learning My sincere thanks are due to the World Bank Library and National Library, the librarians, staff and the administrative office of the Hanoi Foreign Trade University for providing me the valuable materials and assistance I am deeply indebted to my close friends, my relatives and my boyfriend who have always supported and encouraged me to finish the thesis Last but of course not least, I would like to share this moment of happiness and sense of achievement with my parents and my brother, who have always stood by my side and rendered me enormous support and unfaltering love during the whole process of my study Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 ACKNOWLEGEMENTS INTRODUCTION Background to the study Objective of the study Research questions Structure of the thesis .5 Scope of the study Research methodology .5 Chapter LITERATURE REVIEW 1.1 Dumping in international trade 1.1.1 Definition .7 1.1.2 Impacts on importing countries and international trade 1.1.2.1 Impacts on importing countries .8 1.1.2.2 Impacts on international trade 1.2 Anti-dumping law 1.2.1 WTO's anti-dumping law .9 1.2.1.1 Determination of dumping 10 1.2.1.2 Anti-dumping measures .14 1.2.2 EU's anti-dumping law 16 1.2.2.1 Determination of dumping 17 1.3 Comparison between WTO and EU anti-dumping laws 22 Chapter .25 THE FOOTWEAR CASE 25 2.1 Overview of the Vietnam footwear industry 25 2.1.1 The importance of Vietnam’s footwear industry 25 2.1.2 Footwear exports to the European Union 29 2.2 Overview of the EC's anti-dumping petition 30 2.3 The petitioner's arguments .32 2.3.1 Market economy treatment 32 2.3.1.1 Business decisions 34 2.3.1.2 Accounting 35 2.3.1.3 Assets and 'carry over' 35 2.3.1.4 Legal environment and currency exchange 36 2.3.2 Individual treatment .36 2.3.3 Vietnam's selling under the normal value 37 2.3.4 Injury .38 2.3.4.1 Macro-economic indicators 39 2.3.4.2 Micro-economic indicators 41 2.4 The subject country's arguments .42 2.4.1 Market-economy treatment 43 2.4.2 Level of ‘injury’ to EU producers .44 2.4.3 Inappropriate choice of surrogate country 48 2.4.4 Effects on interest of the Community 49 2.5 Summary 50 Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 On the 4th of October, 2006, the EC made their final decision on leather footwear anti-dumping case against Vietnam An official anti-dumping duty of 10% has been imposed on uppers leather footwear from Vietnam in the period of years 52 Chapter .53 RECOMMENDATIONS AND LESSONS LEARNT .53 3.1 Conclusions and recommendations 53 3.1.1 Diversify the markets outside the EU 55 3.1.2 Diversify the product range 56 3.1.3 Enhance model of business transfer 57 3.1.4 Improve competitiveness .58 3.2 Lessons learnts 59 3.2.1 Fully understanding on international trade law concerning dumping issue .59 3.2.2 Strengthen market economy in Vietnam .61 3.2.3 Domestic enterprises must be well-prepared 62 3.2.4 Create good public relation 63 CONCLUSION .64 BIBLIOGRAPHY 65 Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 INTRODUCTION Background to the study In recent years, a great number of bilateral and multilateral trade agreements have been signed between Vietnam and other countries and international organizations, which, among other things, have provided greater access for Vietnamese goods to the global market However, several kinds of Vietnam exports have been accused of being sold at dumped prices in some foreign markets In particular, anti-dumping tariff was imposed on Vietnam by the European Union on glutamate in 1998, by Poland on gas lighter in 2000, by Canada on garlic in 2002, by the US on catfish in 2002, shrimp (2003), woodwork (2004) and again by the EU on bicycles in 2004 On July 2005, the European Commission officially lodged yet another dumping lawsuit against Vietnamese footwear products exported to the EU market Such series of lawsuits has raised massive concern for Vietnamese producers, as it has had a negative impact on international economic integration process of Vietnam, as well as shown that Vietnam has not adequately prepared for a bigger "playing field" Active integration inevitably entails proactive study about foreign markets Nevertheless, international markets in general, and the EU market in particular have different regulations and trading practice that requires deep understanding to defend oneself from implicit risks Although dumping and anti-dumping suits are not something new to Vietnam as it was several years ago, and Vietnam has been moving on a very steep learning curve, it is still necessary for Vietnamese enterprises to deepen their understanding by further analysis if they are to avoid anti-dumping petition as they break into markets abroad Objective of the study This graduation paper, therefore, aims to furnish Vietnamese exporters and concerned government agencies with a structured approach to anti-dumping lawsuits by contributing a closer look at anti-dumping regulations and experience from the footwear case With this study, Vietnamese exporters will hopefully be able to gain the essential ‘weapon’ to defend themselves when there is a complaint filed against them, and more importantly, to avoid being challenged and getting exhausted in the daunting investigation and lawsuit process Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 Research questions The key question is: "How can Vietnamese exporters prove that Vietnam leather footwear is not being dumped into the EU market?" To seek answer to the question, the following subquestions will be addressed: - What are the differences between antidumping law of WTO and that of the EU? - How did the EC accuse Vietnam of dumping leather footwear in the EU market? - What were the arguments used by Vietnam in the footwear lawsuit? - What are the lessons learnt for Vietnam for future dumping and antidumping lawsuits? Structure of the thesis To achieve the above objectives, the thesis is divided into of three chapters Chapter lays the theoretical ground for the paper by defining the two concepts: dumping and antidumping, and presenting different perspective of anti-dumping according to GATT/WTO, and the EU Chapter will then move on with an actual case study: the footwear case It begins with an overview of the footwear industry in Vietnam, and then provides a detailed description and analysis of the footwear dispute procedure, the arguments used by two sides: the EU and VN Finally, the last chapter will conclude the paper with some recommendations for settling other dumping disputes in the future; for avoiding anti-dumping lawsuit; and avoiding negative consequences from the case Scope of the study Dumping and anti-dumping lawsuits are a very broad topic However, this study only focuses on a particular case: the VN - EU dispute on leather footwear This will serve as an empirical but structured approach that Vietnamese current and potential export enterprises need to familiarize with if they are to survive and succeed in the international market Research methodology Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 The report draws heavily on desk research, with data and information obtained from the Official Journals of the European Union, Action Aids Vietnam, the Vietnam Leather and Footwear Association, official and unofficial reports, various comments and figures from published studies by experts in the field, newspapers, magazines, and the Internet This is supplemented by primary information and experience gathered in the field verification exercise by the EU investigators to the footwear enterprises in Vietnam in the summer of 2005 Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 Chapter LITERATURE REVIEW 1.1 Dumping in international trade 1.1.1 Definition According to article 2, part of the agreement on implementation of article VI of the general agreement in tariffs and trade 1994, "a product is to be considered as being dumped, i.e introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country" A question is raised: what are the reasons of dumping activities in international trade? In today’s global game of intense competition, dumping helps enterprises easily break into and then dominate other markets However, there are differences between the aim of big companies and small ones, developed countries and developing ones In respect of small companies and developing countries, their products are less competitive and they have to dump in an effort to sell their goods With regard to big firms and developed nations, they sell at a low price on importing markets to gain market share, furthermore, to kick out competitors, and gradually dominate the importing markets Once breaking into importing markets, exporters are able to completely control them by low a price that is the target of dumping activities Secondly, in case countries are shortage of foreign currencies, they may foster export by lowering goods' prices However, dumping may happen beyond the control of producers, exporters in some cases, for instance: bottle-neck, supply exceeds demand, damageable inventory, etc.; they have to sell goods at lower prices to recover their capital Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 In short, there are many purposes to dump, but whatever purposes they have, dumping still causes bad effects on importing countries, others nations, and international trade 1.1.2 Impacts on importing countries and international trade 1.1.2.1 Impacts on importing countries Nowadays, dumping activities are becoming popular in the context of international trade Eliminating fair competition to break into markets, dumping has turned into an obstacle against the trend of trade liberalization In the short term, consumers gain benefit from dumping because of cheap price However, this is an unfair competition activity; it can seriously damage domestic production of importing countries in the long term As a result, nations around the world try to fight against dumping in an attempt to prevent or minimize dumped goods on their markets in case the imports of that type of goods have caused or threaten to cause damage to a substantial part of the domestic industry 1.1.2.2 Impacts on international trade In the short term, dumping helps transaction of goods on international trade increase in quantity Normally, dumping enterprises intend to take over foreign markets, i.e competing with domestic producers or importers from other countries for market share As selling price is lower than equilibrium price on the market, in accordance with the law of supply and demand, there will be a new equilibrium point, and an increase in quantity demanded that will be met by exporters Therefore, an increase in quantity demanded will lead to an increase in quantity supplied, that means international trade will develop In the long term, when dumping enterprises control markets, and then raise selling prices, quantity demanded will decrease gradually, and so does trading volume Otherwise, domestic enterprises better their competitive ability; vie with foreign exporters for market share If government of import country imposes anti-dumping tariff, import goods will no longer be attractive for low price, so import quantity will reduce Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 Dumping always bring benefit for consumers as lower price, wide selection of cheap and diversified import goods On the contrary, domestic producers suffer losses Moreover, workers will lose their jobs because of reducing production, or bankruptcy If the interests of consumers are bigger than the ones of home producers and the unemployed, the society still benefits On making decision of whether to levy anti-dumping tariff or not, many nations consider this element Dumping and anti-dumping measures are controversial and complicated issues that result in strained international trade relations, hinder WTO's target in establishing a transparent, equal international business environment 1.2 Anti-dumping law As analyzed above, if the export price of a product exported from one country to another is less than a comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country Therefore, by imposing antidumping measures against foreign exporters, importing countries want to prevent exporters from selling goods at price below its normal value The main purpose of the imposition of anti-dumping measures is to protect the domestic economy and home production from unfair competition, furthermore, to create fair competition environment, a vital factor for trade liberalization Consequently, anti-dumping measures are said to be necessary, as they set up the legal framework in which all players enjoy fair competition Contrary to the above purposes, domestic firms can strategically use this measure to target only foreign firms they view as competitive rivals, some nations abuse anti-dumping measures to protect domestic production which lead to commercial dispute As a result, it is necessary to study dumping and anti-dumping law to take part in international trade 1.2.1 WTO's anti-dumping law The Agreement on Implementation of Article VI of GATT 1994, commonly known as the Anti-dumping Agreement, is a suggestive document for nations to refer to when they set Le Thanh Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 up their own anti-dumping law However, WTO's members have to obey Anti-dumping Agreement The Anti-dumping Agreement includes: - Regulations on content: detailed provisions about methods and criteria for determination of dumping, injury, causal link between the dumped imports and the alleged injury - Regulations on procedure: provisions about investigation and anti-dumping duties imposition - Regulations on dispute settlement among WTO's members concerning anti-dumping issues - Regulations on competence of Committee on Anti-dumping Practices 1.2.1.1 Determination of dumping A dumping case will be determined by comparing the export price and the normal value of the product Export price Export price is the selling price from country of origin or exporting country to importing country There are two ways of calculating export price: - Export price is the transaction price between producer or exporter of exporting country and importer of importing country - The export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer, or if the products are not resold to an Le Thanh Hai - A4 - BBE - K41 10 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 The adoption of anti-dumping measures will negatively affect legitimate benefits of 450 million consumers in 25 EU countries as well preventing them from lower-priced options in shoes selection It will also have effect to EU Stakeholders, including but not limited to designers, dealers, distributors, and retailers Final decision On the 4th of October, 2006, the EC made their final decision on leather footwear anti-dumping case against Vietnam An official anti-dumping duty of 10% has been imposed on uppers leather footwear from Vietnam in the period of years Le Thanh Hai - A4 - BBE - K41 52 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 Chapter RECOMMENDATIONS AND LESSONS LEARNT 3.1 Conclusions and recommendations The implementation of anti-dumping duties is a trade barrier which is more frequently used on the international market This kind of barrier is mainly used by developed countries to limit exporting goods from developing countries which have comparative advantage on labor cost and other cheap inputs Vietnam is not an exception as the EU has not recognized Vietnam as a market economy Facing this challenge, Vietnam should consider it as an indispensable and objective one on world economy integration, between a developing, nonmarket economy and a developed one Although the EU often encourages all nations on the world to boost trade liberalization, fair competition, demolishing trading obstacles and non-trading barriers, it is now taking measures to apply anti-dumping duties on Vietnam With the aim to protect small group pf manufacturers without comparative potentials in leather shoes production, including France, Italy and Spain, the EU has imposed tariffs threaten to bankrupt many Vietnamese exporters at the cost of thousands of jobs The proposal runs counter to the EC-initiated spirit of trade liberalization and goes against Vietnam's poverty reduction effort supported by the European Union It affects the smooth development in the Vietnam-EU relations, noting that some EU members have opposed the planned anti-dumping duty Not only Vietnamese stakeholders see the petition as unfair, but some EU stakeholders also se it as unreasonable According to the European Chamber of Commerce (Eurocham), "the proposal for the anti-dumping provision duties, at least part of that, has been based on the inadequate information provided by the foreign partners, to whom Vietnam enterprise are Le Thanh Hai - A4 - BBE - K41 53 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 sub-contractors" Moreover, as said by the EU parliament delegation on its visit to Vietnam, the imposition of anti-dumping duties in footwear products originated from Vietnam to EU could not change the weak situation of the EU producers Eurocham also requires the consideration for Vietnam's status as a developing country while imposing of anti-dumping duties Moreover, one member of the European parliament, Mr Frithjor Schmidt, said: "The decision of the provisional anti-dumping duties is just based only on trade aspects, but not on other aspects, like development and social aspects, which should not be neglected when making a deal with developing countries" Leafso said the leather shoes industry has lost one-third of orders from the EU as many importers are turning to other countries such as Indonesia Some producers have withdrawn processing orders from Vietnam The inflow of FDI has also been seriously affected as FDI and private enterprises operating in the sector account for a large proportion of overall capital while State-owned enterprises make up only 10% There has been a general drop in income Revenue declined by 15-60%, or tens of billions of dong in value (about 500,000 euro equivalent), at 76% of enterprises Since women make up 80% of the total labor force in this sector, most of them come from countryside, they are likely to have less income and fall again into the vicious circle of poverty This would definitely increase the burden to the whole society and thus increasing poverty in Vietnam The anti-dumping suit has caused a sharp drop in wages, to minimum wage only, or in some cases to "job waiting" wages of 70% minimum wage Unemployment and loss of income are a fear for everyone For women and migrant workers, it is much more than that, since they are vulnerable in the society A large number of workers have an average of two dependents, most of whom are elderly or children A fall in income and production would make life much more difficult to take care of their families Industrial production, particularly footwear, has helped employees from the countryside live a more steady life But with job losses resulting from the EC suit, all they can is return to their hometowns for farm work And even that avenue is sometimes closed, when farmland is converted to other purposes No jobs, no income, and no chance to return - all of them can lead an honest employee to engage in high risk behaviors in one way or another It might be their way of Le Thanh Hai - A4 - BBE - K41 54 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 survival They might engage in sex work, trafficking of women, drug use, drug trafficking, etc They must whatever they can to have income Such risk behaviors would affect not only themselves but also society as a whole Faced with the challenges discussed above, Vietnamese exporters are advised to take the following steps: 3.1.1 Diversify the markets outside the EU The footwear industry should shift from the EU market to others, including countries and regions with big purchasing power, including the US, Japan, Canada, China's Hong Kong, South Korea and Australia, and markets with high potential growth like Indonesia, Malaysia, the Middle East, Africa, South Asia and Russia Besides researching and developing on potential markets, Vietnamese enterprises need to better promotion activities, look for distribution partners After being sued by the EU, Vietnam footwear export turnover to the EU has decreased, meanwhile turnover to the US has been in opposite direction The US market may be the importing market of Vietnam, take the place of the EU The United States annually imports nearly 2.124 billion pairs of shoes and sandals worth 16.19 billion dollars China is the country's biggest footwear supplier with a market share of 70 percent, followed by Italy 7.7 percent, Brazil 6.7 percent, Indonesia percent and Vietnam 2.9 percent Vietnam reaped 450 million dollars from exporting footwear to the United States in the first nine months of this year, a year-on- year rise of 52 percent The revenue in September alone surged over 80 percent to roughly 55 million dollars Key items shipped to the market are sports shoes, leather-upper shoes, and cloth-upper shoes, adding that foreign- invested enterprises contribute most to the footwear export revenue, since they actively promote trade due to financial strength and launch products with well-known brands under subcontracts with overseas firms Domestic producers have not fully exploited their potentialities Thus, the state should assist domestic shoes producers, especially small-and medium-sized enterprises, in accessing the US market to ensure the Le Thanh Hai - A4 - BBE - K41 55 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 sustainable development of the local footwear industry, adding that the producers themselves should be more creative in designing models, and more active in building their own product brands Relevant Vietnamese agencies will intensify trade promotion activities, expanding support to leather footwear producers and exporters, and further studying fashion trends in overseas markets to make suitable products As Vietnamese producers have just accessed the US market, they still have many opportunities to widen their markets there Vietnam plans to earn over one billion dollars in 2010 from shipping footwear to the United States, equal to more than five percent of the foreign country's total footwear import turnover, the Trade Information Center under the Trade Ministry said, noting that the percentage was three percent in 2005 In the context of anti-dumping case against Vietnam and China, Thailand, Indonesia and some other footwear exporting countries in Asia have temporarily neglect several markets among which is Australia market, in order to gather human and material resources to accomplish orders from the EU Seizing this opportunity, many Vietnam footwear export enterprises have boosted exports to Australia Among all the goods, knitting–capped shoes and leather capped–shoes enjoyed major demand in Australian markets, especially tanned leather–capped sports shoes Vietnam’s footwear exporting to Australia has been enjoying convenience in the current years because exporting tax on these goods in Australia has been reduced to 12.5 percent from 17.5 percent since January 2005 and to be down to 7.5 percent since January 2007 On the other hand, Vietnam and Australia have been accelerating implementation of agreements and commitment in opening market as well as trade liberalization Besides foreign markets, Vietnamese footwear enterprises also need to boost sales in the domestic market, and intensify investment in renewing production technologies to produce more high-grade products using no leather uppers 3.1.2 Diversify the product range Le Thanh Hai - A4 - BBE - K41 56 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 The EU has only pursued uppers leather footwear, enterprises can switch to materials like resin and leatherette which are not subject to tariffs or can keep exporting other types of footwear, for example shoes with their uppers and soles made of rubber or plastic, and different kinds of sandals to the EU market Besides leather footwear, Vietnam also has many competitive products such as sport shoes, women shoes, children shoes, canvas shoes, embroidered shoes, leatherette shoes, etc Furthermore, domestic materials are available for producing canvas shoes, embroidered shoes Vietnamese footwear enterprises should focus on producing high priced leather shoes because: 1)low priced products are easily made and sold, however, producers would face severe challenges from many competitors like China, India, Thailand, etc and various exporting countries having the same production skills If leather shoes are also their main exported goods, the competition in price as well as quantity is unavoidable 2) If Vietnam has to compete in terms of price, its products can not survive in the "war" against Chinese low priced products Besides, there are many footwear exporting countries produce shoes at the equivalent price with some types of Vietnamese footwear Therefore, if Vietnam merely pays attention to manufacture low priced commodities, it would be at a disadvantage in competition Moreover, it easily becomes engaged in anti-dumping lawsuit The petition against Vietnamese uppers leather footwear is the consequence of producing and exporting low priced products As a result, it is necessary to adjust the mechanism of production towards high priced leather footwear That would help Vietnam avoid anti-dumping barrier, furthermore, it could approach high-income consumers which promotes Vietnam's prestigious and competitive ability on foreign markets 3.1.3 Enhance model of business transfer Vietnamese enterprises should carry out the model of business transfer This is a popular model in the world but it is not familiar in Vietnam Business transfer has two typical forms: licensing and technology transfer Regarding the first form, Vietnam leather export and manufacture enterprises are able to buy license to use trade name of a famous footwear companies like Italian or French companies Then these companies have to run the business independently in a certain period Le Thanh Hai - A4 - BBE - K41 57 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 of time without binding regulations from the licensers That helps Vietnamese enterprises avoid lawsuits, enhance reputation and improve competitiveness This type of business transfer is also an element which assists Vietnamese enterprises in building and develops their trade name in the future Concerning the second type, in addition to using the licensers' trade names, Vietnamese enterprises are transferred mode of conducting business as well as style of management This is the most effective form of business since Vietnam enterprises have to follow regulations and strict process in running the business in conformity with criteria being set by famous trade name owners; and have the opportunities to be known by the European consumers Whoever is using the trade name to business, the relationship between the licensees and licensers is always close in order to protect the prestigious and trade name value Vietnam firms will gain experiences in management, operating style which satisfies high income consumers with strict requirements on product, and being familiar with using well-known brand name shoes This form helps Vietnam companies overcome anti-dumping barrier, bolster its reputation and image on the European market 3.1.4 Improve competitiveness Domestic enterprises need to invest in new technology, high-class shoes production At first, domestic enterprises need to reduce input costs and create high added value in each product They have to diminish material imports rate for input by investing in domestic production The association among domestic firms is necessary as receiving big orders or negotiating material prices Then they should improve designers' skills, establish distinctive trademark, and provide attractive and comfortable models Further efforts should be made by Trade promotion Center in Hanoi and Ho Chi Minh City to introduce Vietnamese products on international market in an organized, highly competitive way Domestic companies cooperate with Association and Commercial Counselor in countries supplying major materials (China, Taiwan, Korea, etc.), main importing countries (EU, US, Japan, etc.), and potential importing markets (Australia, South Africa, etc.) to actively research technical barriers of these countries against footwear in an effort to find out the most efficient selling and payment method Le Thanh Hai - A4 - BBE - K41 58 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 It is also necessary for domestic companies to change from sub-contractors to owners The major requirement is to connect design and manufacture They must have qualified employees specializing in exploring material resources, selling products, taking care of consumers, clearing import-export procedures, being well-informed about financial sector, advance manufacturing process, renewing equipment Enterprises have to perform functions of trading companies Instead of marketing their products to trading companies, they introduce their commodities directly to foreign importers or large scale retailers Nowadays, Vietnamese exports have been increasing and they have to bear the risk of being levied antidumping tariff Therefore, some recommendations for Vietnam are discussed shortly in order to solve future dumping and antidumping cases 3.2 Lessons learnts The footwear case has significant implications for Vietnamese exporters, whether they are current or potential, big or small, state-owned or private, domestic or foreigninvested, regardless of the industry they are operating in The key lessons are: 3.2.1 Fully understanding on international trade law concerning dumping issue The biggest difficulty Vietnam has to face now is that almost all government officials being responsible for this issue not have thorough knowledge of dumping and international law dealing with dumping and anti-dumping Vietnamese government must have specific strategy in training official in charge so that they will be expert on law, have experience to settle international commercial disputes in general, be proficient in antidumping measures in particular Dumping and anti-dumping have not caught the eyes of the scientific world Training system on law and commerce has not had training program and lecturers specializing in dumping and anti-dumping law As a result, Vietnam does not have any lawyer or consultant being well-informed in dumping When Vietnam involves in a dumping petition, both the Government and its enterprises have to hire foreign law companies or foreign consultants, which is either expensive or ineffective Le Thanh Hai - A4 - BBE - K41 59 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 Each enterprise may have their own lawyers, or a group of enterprises hire a lawyer to consult legal issues There should be a co-ordination between Vietnamese lawyers and foreign ones, as Vietnamese lawyers are not able to fully understand EU's law, and represent Vietnamese firms to report to the EU, while foreign lawyers are not familiar with Vietnamese enterprises' activities Vietnamese lawyers play a significant role in anti-dumping lawsuit against Vietnamese firms, since they prepare most arguments and evidences in response to the Commission Young Vietnamese lawyers are now showing their ability, because they are good at foreign language, and have knowledge, experience in consulting international transactions To break into foreign markets effectively at a low cost and risk, Vietnamese firms should spend a certain amount of money to hire consulting companies or well-known consultants because they are experts in local law They should be consulted as soon as penetrating into new markets, should not wait until being sued, they may suffer severe loss since the petitions often last for years Chinese enterprises are good examples When they broke into new markets, they were on the defensive like Vietnamese firms now Because of having been sued in many anti-dumping petitions, most of Chinese firms hire lawyers to consult about legal barriers in foreign markets, including anti-dumping barrier Moreover, they collect information related to foreign markets to actively deal with anti-dumping lawsuit Not only official in Ministry of Trade and related Association have to understand about anti-dumping law but Vietnamese export-import enterprises have to research as well The Government should collect market information through its ambassadorial offices to provide domestic firms with importing market situation, legal framework, and culture so as to avoid or overcome trade barriers to fast approach the market Regarding dumping suits, Governmental offices have to assist companies with information related to the case and good lawyers The government can share information via Internet, or cooperate with other Government and corporations to organize conferences, trade fairs and exhibitions Human resources are becoming more and more important in joining in international trade However, this is our weakest point Vietnamese enterprises should pay more attention to personnel system, training program for staff working in export-import field to improve their professional skill, knowledge about foreign markets, international law, especially antiLe Thanh Hai - A4 - BBE - K41 60 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 dumping regulations Besides, companies should have promotion policies to attract human resource 3.2.2 Strengthen market economy in Vietnam There is no specific, objective criterion to differentiate between a market economy and a non-market one Therefore, granting market economy treatment may depend on subjective opinions of each commercial partner or political relation Although Vietnam has achieved remarkable success in developing private economy, eliminate monopoly in some key aspects, etc However, it has not been recognized as market economy by the EU and the USA which cause Vietnam at a disadvantage in anti-dumping case In order to win dumping disputes made by other countries, Vietnam should strengthen its economy to be classified as a “market economy” as this is the first step to win dumping suits  The extent of government ownership or control of the means of production - Speed up the privatization process - Continue to strengthen land-use rights, and to simplify and reduce regulatory controls  The extent to which joint ventures or other investments by firms of other foreign countries are permitted in the foreign country - Remove all dual pricing relating to foreign-invested enterprises (FIEs) including land rental fees - Make government policies the same for both domestic enterprises and FIEs  The extent of Government control over the allocation of resources and over the price and output decisions of enterprises - Remove all price controls on industrial goods (e.g cement, steel, iron) - Introduce Competition Law Le Thanh Hai - A4 - BBE - K41 61 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 - Continue to encourage competition between state-owned commercial banks and other financial intermediaries in Vietnam - Continue to “level the playing field” between private and state enterprises, particularly concerning finance and land-use rights  Establish a transparent, coherent accounting system in line with international standards 3.2.3 Domestic enterprises must be well-prepared Domestic firms have to prepare documents and records related to accounting and auditing process These documents and records must be transparent so that they can be persuasive proof against the implication of anti-dumping duties Normally, the EU's final decision has to base on investigation to verify production situation and consumption The whole input and output cost of the enterprise will be reflected on the accounts and will be certified by auditing company If these costs are equivalent to other countries in the area having the same level of development and they are clear, transparent, the EC investigators will have difficulty in finding good reasons for determining dumping actions Enterprises must be ready and active, cooperative on being involved in anti-dumping cases This is a chance for them to collect information and proof the reasonability of their export price Once they not take part in, they will lose their right to complain and protest Investigating authorities will make their own decisions and impose anti-dumping measures which benefit for them On the other hand, when foreign firms win the case, they will not hesitate to sue other commodities, therefore, Vietnam will have difficulties in exporting its products As a result, Vietnamese enterprises should try their best to win the case or being imposed anti-dumping tariff at the lowest rate Besides fully cooperating with investigating authorities, enterprises should hire professional, prestigious lawyers that cost a lot of money Firms should save a certain amount of money to prepare in advance for legal disputes Being well-prepared will helps firms actively deal with petition without interfering in business activities Le Thanh Hai - A4 - BBE - K41 62 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 3.2.4 Create good public relation That is the relations with Associations, consumers, environment activists, Labor Unions in the importing markets In international trade, public relation is widely used in an effort to create waves of opposition from consumers, related associations that can change the decisions of the EU It is important to establish a good relationship, win the confidence of public, for example, environment protection, labor law conformation Making connection between consumers and importers in importing countries will be an advantage for exporters Anti-dumping petition is a contradiction between foreign exporters or domestic importers with domestic producers, but in spite of the result, consumers are at a loss Anti-dumping tariff is an indirect one which will be paid by end users The imposition of anti-dumping tariff will affect the interest of consumers and importers in the importing countries Vietnamese exporters should take advantage to put pressure on investigating authorities In developed countries like the US or the EU, consumers often establish consumer organizations to protect their interest These organizations have great influence, so Vietnamese enterprises should establish good relationship with them This activity is very popular in developed countries Vietnamese firms can create this relationship by assign representatives to investigate importing markets, or set up representative offices, and maintain the relation with consumer organizations as well as importers In conclusion, Vietnam has just integrated into international trade, dumping and antidumping are still new issue to domestic enterprises Once they are become engaged in an anti-dumping case, they realize its effect and learn some lessons to avoid lawsuits or to solve the problems effectively Vietnamese companies have to equip themselves with basic knowledge on dumping and anti-dumping, as well as unite with one another to set a common price to avoid anti-dumping duties Enterprises have to be ready to deal with anti-dumping petitions When being involved in a case, Vietnam firms should associate with the importers and consumers in the importing countries, other enterprises in and outdoor to protect their rights, actively cooperate with investigation authorities Le Thanh Hai - A4 - BBE - K41 63 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 CONCLUSION Globalization is naturally the integration of developing economies into the world economy; they have to compete sharply with developed nations This is an unfair competition in which big countries are calling for "trade liberalization", but they still abuse unfair trade barriers to protect their domestic markets against developing countries Among those "tricks" is an anti-dumping measure, an effective tool which is widely used today As the country is deepening its integration into the global economy, Vietnamese export enterprises have to carefully research many issues in order to survive and compete, to maintain, and to strengthen as well as bolstering their positions in the world of business After being involved in around 23 anti-dumping petitions, they are now becoming increasingly aware of the dumping issue However, dumping is very complicated, so Vietnamese companies should study the Anti-dumping Agreement, the basic anti-dumping law of the world set by the WTO On exporting goods into a market, they should research the anti-dumping law of that market as each nation has their own regulations This thesis focuses on the EU market, a vast and potential market for Vietnam, and the recent EU's anti-dumping petition against Vietnamese leather upper shoes footwear products The thesis aims at providing basic knowledge about the WTO's and the EU's anti-duping law It also draws out lessons from the footwear case and makes recommendations in the hope that Vietnamese enterprises can make use of them to protect themselves against unfair competition in the world market Le Thanh Hai - A4 - BBE - K41 64 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 BIBLIOGRAPHY Commission Regulation (EC) No 553/2006, Official Journal of the European Union Half of a million Vietnamese footwear jobs at risk: Where is the balance between trade and development?, May 2006, ActionAid Vietnam and Vientam Leather and Footwear Association Vietnam leather and footwear industry - Tradition and Modernity, Hanoi National Politics Vietnamese leather footwear are not dumping, Hong Phuc, Page 20, Vietnam Trade and Market EU anti-dumping tariff and some solutions for Vietnam, PH.D Nguyen Anh Tuan, No.10/2006, Industry Magazine www.euractiv.com www.cecshoe.be 8.www.tdctrade.com www atimes.com 10 www.europa.eu.int 11 www.thanhnien.com.vn 12 www.vnexpress.net Le Thanh Hai - A4 - BBE - K41 65 ... EU? - How did the EC accuse Vietnam of dumping leather footwear in the EU market? - What were the arguments used by Vietnam in the footwear lawsuit? - What are the lessons learnt for Vietnam for... Hai - A4 - BBE - K41 Website: http://www.docs.vn Email : lienhe@docs.vn Tel (: 0918.775.368 On the 4th of October, 2006, the EC made their final decision on leather footwear anti-dumping case against. .. of anti-dumping according to GATT/WTO, and the EU Chapter will then move on with an actual case study: the footwear case It begins with an overview of the footwear industry in Vietnam, and then