80 per cent of enterprises exporting shoes in Vietnam provide outsourcing for foreign enterprises. They don’t decide on a product’s price in the imported market. They have no means to dump. Yet, in the investigation accusing Vietnam of dumping leather-capped shoes to the European Union (EU) market, the European Committee (EC) said, “there is obvious evidence of Vietnam’s dumping”. Not only Vietnam but also many EU members find this “obvious” conclusion irrational.
Vietnamese enterprises are employed by foreign enterprises
On February 23rd 2006, Mr. Peter Mandelson – EU Trade High Commissioner has affirmed that the EC’s investigation into Vietnam’s dumping of leather shoes has diascovered obvious evidence of the state’s interferences. They include “cheap finance, tax reduction or exemption and lease of land below market-based prices”. The report also said that since 2001, because of the increase of dumping imports, EU’s footwear industry has witnessed reduced production scale of 30 per cent with the loss of 40,000 jobs. In the conclusion, the report said “State’s interference has led to unacceptable and uncompetitive dumping.”
At a press conference in Hanoi recently, Ms. Dinh Thi My Loan – Director General of Vietnam Competition Administration Department (VCAD) said: “We are deeply disappointed with evidence considered obvious by the EU”. Vietnamese shoe enterprises work under market economy principles with free business and equal competition. The Vietnamese government doesn’t interfere or subsidize them. Vietnam is a country with an economy in the interim. During this period, the attraction of foreign investment takes an important role in economic development. Reduction and exemption of land tax exists to encourage investment, not to reduce production prices. The EC should not consider these as parts of production cost. “This kind of encouragement is the usual tool of market economies, including EU members, in their economic policies,” said Ms. Loan.
According to Ms. Loan, the EC’s argument of a link between narrowed shoes production in the EU, losing 40,000 jobs and the increase of shoe imports from Vietnam and China is an inappropriate accusation. The EU’s statistic of imports shows that, since March 2004 to March 2005, even though Chinese footwear imports into the EU increased 320 per cent with 95 million pairs and that of Vietnam increased 700 per cent with 120 million pairs, the entire number accounted for only 8 per cent of theEU market for footwear.
In fact, the causes of the EU’s narrowed shoes production and jobs loss are the same as that of the textile and garment crisis. The EU’s famous branded shoe producers have moved their production to Asia - the place of cheap labour force and no less modern technology. Their formula is “Asia produces, Europe and America consume”.
After South Korea, recently, those producers have moved to Vietnam, Indonesia, Thailand, The Philippines and China in particular. So, the EU already knew that Vietnamese enterprises work for foreign enterprises. They don’t decide on a product’s price in imported markets. They have no means to dump.
Losses for both Vietnam and the EU
The EC’s decision serves to protect the interests of some South European countries such as Italy, Spain, and Portugal who are under pressure of competition in leather shoes. Many other EU members have opposed the decision to introduce anti-dumping measures. Famous shoe brands like Clarks and Timberland accused the EC of “wrongdoing in introducing the anti-dumping tax, this will increase the price of shoes in Europe’s retail market. Then, consumers will suffer”
The Danish Deputy Prime Minister Bendt Bendtsen expresses serious concern regarding the decision of the European Commission to introduce anti-dumping measures against footwear producers in Vietnam and China. "The decision of the European Commission is of great concern to me. I believe that the Commission is heading in the wrong direction. I will work actively to have the Commission take the negative consequences of these measures into account," said the Danish Deputy Prime Minister.
"These measures will harm the European consumers as well as the more advanced producers. In the end the costs will be paid by the consumers," says Bendt Bendtsen.
Vice Chairman of the Shoe and Leather Association of Ho Chi Minh City, Mr. Diep Thanh Kiet is both disappointed and worried about the tax rate of 16.8 per cent on Vietnamese shoes. This high rate means that Vietnamese shoes will not be able to compete with products from neighboring countries like Thailand, The Philippines, Indonesia and India. Vietnamese shoes can survive only when the tax rate is under 15 per cent and different from that on Chinese products. Currently the tax rate for Chinese shoes is 19.2 per cent, not much different from 16.8 per cent of Vietnam.
However, Vietnam is not alone in its suffering. According to European experts, with an irrational tax rate, over 500,000 workers in designing, selling and delivering areas will be fired. This number is bigger than that reported by EU shoe producers (the complainant of this suite)
Mr. Kiet said that, it is time for the EU to consider if it should maintain leather industry. Without Vietnam or China, the EU leather shoe industry operates inefficiently because of the lack of cheap material and workforce. The EU should restructure labour intensive industries like leather shoes. That includes the reasonable allocation of labour in globalisation process. If the EU keeps applying anti-dumping tax as a protection, it will prove to be an “unwise” measure.
Kim Phuong
Vietnamese
