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EU ANTI-DUMPING LAWSUIT AGAINST VIETNAM - WHAT CAN BE LEARNT FROM THE FOOTWEAR CASE?
Graduation thesis 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 Graduation thesis Le Thanh Hai - A4 - BBE - K41 Graduation thesis ACKNOWLEGEMENTS .1 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 .7 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 .9 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 Le Thanh Hai - A4 - BBE - K41 Graduation thesis 2.1.1 The importance of Vietnam’s footwear industry 25 2.1.2 Footwear exports to the European Union 30 2.2 Overview of the EC's anti-dumping petition 31 2.3 The petitioner's arguments 32 2.3.1 Market economy treatment 33 2.3.1.1 Business decisions .34 2.3.1.2 Accounting 35 2.3.1.3 Assets and 'carry over' 36 2.3.1.4 Legal environment and currency exchange 37 2.3.2 Individual treatment .37 2.3.3 Vietnam's selling under the normal value 37 2.3.4 Injury 39 2.3.4.1 Macro-economic indicators 40 2.3.4.2 Micro-economic indicators 41 2.4 The subject country's arguments 43 2.4.1 Market-economy treatment 44 2.4.2 Level of ‘injury’ to EU producers 45 2.4.3 Inappropriate choice of surrogate country 49 2.4.4 Effects on interest of the Community 50 2.5 Summary 51 Chapter 54 RECOMMENDATIONS AND LESSONS LEARNT 54 3.1 Conclusions and recommendations 54 3.1.1 Diversify the markets outside the EU 56 3.1.2 Diversify the product range 58 3.1.3 Enhance model of business transfer .58 3.1.4 Improve competitiveness .59 Le Thanh Hai - A4 - BBE - K41 Graduation thesis 3.2 Lessons learnts 60 3.2.1 Fully understanding on international trade law concerning dumping issue 60 3.2.2 Strengthen market economy in Vietnam 62 3.2.3 Domestic enterprises must be well-prepared .63 3.2.4 Create good public relation 64 CONCLUSION 66 BIBLIOGRAPHY 67 Le Thanh Hai - A4 - BBE - K41 Graduation thesis 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 Le Thanh Hai - A4 - BBE - K41 Graduation thesis 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 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 sub-questions 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 Le Thanh Hai - A4 - BBE - K41 Graduation 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 anti-dumping, 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 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 Le Thanh Hai - A4 - BBE - K41 Graduation thesis verification exercise by the EU investigators to the footwear enterprises in Vietnam in the summer of 2005 Le Thanh Hai - A4 - BBE - K41 Graduation thesis 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 Le Thanh Hai - A4 - BBE - K41 10 ... 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. .. when they set up their own anti-dumping law However, WTO''s members have to obey Anti-dumping Agreement The Anti-dumping Agreement includes: Le Thanh Hai - A4 - BBE - K41 13 Graduation thesis - Regulations... Comparison between WTO and EU anti-dumping laws .22 Chapter 25 THE FOOTWEAR CASE 25 2.1 Overview of the Vietnam footwear industry 25 Le Thanh Hai - A4 - BBE - K41 Graduation thesis