90,000 Shoe Workers Likely to Loss Jobs due to EC Anti-dumping Taxes

The new anti-dumping taxes imposed on Vietnam’s shoes with leather uppers by the European Commission (EC) will probably make around 80,000-90,000 workers out of more than 500,000 in the local footwear industry loss their jobs, announced Mr. Nguyen Gia Thao, President of Vietnam Leather and Footwear Association (LEFASO Vietnam).  

The taxes will rise gradually to 16.8 per cent after starting at 4.2 per cent from April, released the EC on March 23, 2006. The move makes a price increase of Euro1.5-2/pairs of shoe exported to EU, the largest market of Vietnam’s shoes.

 

LEFASO said that the taxes will damage not only Vietnamese suppliers but also benefits of designers, dealers and distributors, and consumers from EU. Affirmations of the EC announcement are unfair and inconsonant with reality, and Vietnamese leather shoe makers do not dump in EU, reaffirmed the association. Competitive edges of the local firms are low-cost labor force, abundant material sources imported from regional countries, modern technology, and others, said LEFASO.

 

Since the fourth quarter of 2005, leather shoe orders from EU have sharply reduced, especially from the beginning of this year, said Mr. Thao, adding that most EU customers having close business relations with Vietnamese shoe manufacturers have temporarily postponed their orders and if the taxes are remained they will turn to other countries such as Indonesia, Thailand and India.

Some local producers have made their workers off work or narrow their production activities so far. An Giang Shoe Company has reduced its number of workers to 400 from 700, and Phu Ha Shoe Factory under Phu Lam Shoe Company to 1,200 from 1,950. Particularly, for Barotex Shoe Factory and Kainan Joint venture, EU customers have stopped all orders of shoes with leather uppers. Mr. Thao added that the lawsuit has badly affected not only the local footwear industry, one of the key export sectors of Vietnam, but also the living of its workers.    

 

According to LEFASO president, to expand foreign markets, Vietnamese shoe firms should actively turn to other potential, large markets, such as the US and Japan. Statistics show that Vietnam’s shoe exports to the US in 2004 and 2005 steadily increasing, topping at 16 per cent and 20 per cent of the total, respectively.

 

In a related development, Trade Minister Truong Dinh Tuyen has arrived in Geneva, Switzerland to participate in the 11^th negotiation round on Vietnam’s WTO accession and he will directly flight to Belgium to negotiate with EC on this issue, according to Mr. Thao. He expected that the trip of the Vietnamese trade minister will partly help reduce the anti-dumping taxes on Vietnam’s shoes.