Luận văn thạc sĩ UEH quantifying effects of EU antidumping duty on vietnam footwear

UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES

HO CHI MINH CITY ERASMUS UNIVERSITY ROTTERDAM

VIETNAM THE NETHERLANDS

VIETNAM - NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

Quantifying Effects of EU Antidumping Duty on

Vietnam Footwear

By NguyễnTrườngToan

A thesis submitted in partial fulfilment of the requirements for the degree of

Master of Arts in Development Economics

Under the Supervision of:

Assoc.Prof. Dr.PhạmHoàngVăn and Assoc.Prof. Dr.NguyễnTrọngHoài

HO CHI MINH CITY, April 2014

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DECLARATION

This is to certify that this thesis entitled “Quantifying effects of EU antidumping

duty on Vietnam footwear”, which is submitted by me in fulfillment of the requirements for

the degree of Master of Art in Development Economic to the Vietnam – The Netherlands

Programme. The thesis constitutes only my original work and due supervision and

acknowledgement have been made in the text to all materials used.

Nguyễn Trường Toan

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ACKNOWLEDGEMENT

I would never have been able to finish my dissertationwithout the help and support of

people surrounding me.

First and foremost, I would like to express my gratitude tomy mentors Assoc. Prof.

Dr. PhạmHoàngVăn, and Assoc. Prof. Dr. NguyễnTrọngHoài for the continuous support of

my M.A. study and research; for their patience, encouragement, erudite knowledge. Their

excellent guidance encouraged me in all the time of doing this study. I have been strikingly

lucky to have supervisors who cared so much my thesis, and answered to all my questions

and queries punctually. I could not have imagined having better supervisors and advisors for

my research.

Besides my mentors, I would like to thank Dr Pham Khánh Nam and Prof Jame

Riedel for their thorough comments and worthy ideas that help to enhance my thesis’s value.

My sincere thanks also goes toall the lecturers at the Vietnam –

NetherlandsProgram for their knowledge of all the courses, during the time I studied

at theprogram.I would like to offer my special thanks to Dr. LêVănChơn, Dr,

TrươngĐăngThụy, Dr. Lorenzo pellegrini who help me significantly in the courses and

thesis writing processes. In addition, I would like to express my great appreciation to my

friends for their motivations.

Last but not the least;I owe a very important debt tomy family: my parents

NguyễnVănTố and Đỗ Thị Liễu, for giving birth to me at the first place and supporting me

spiritually throughout my life.

Hồ Chí Minh city, April 2014

NguyễnTrườngToan

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ABBREVIATIONS

AD Antidumping Duties

GATT General Agreement on Tariffs and Trade

WTO World Trade Organization

EU European Union

U.S United States

EC European Commission

C.I.F cost.insurance. freight

CN8 8-digit Combined Nomenclature code

HTS Harmonized Tariff Schedule

F.O.B Free on Board

GSO Vietnam General Statistics Office

BTA Bilateral Trade Agreement

USITC United States International Trade Committee

EUROSTAT European Commission Statistic Office

W.P.T wood and wooden, papers and textiles

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ABSTRACT

This paper examines effect of EU antidumping on Vietnam footwear firms. We find

that EU AD causes a 52.8% decline of Vietnam targeted export products, at least. Besides

value, there is 42.2% reduction of the least affected scenario. For the most impacted images,

it leads to a fall of 105.6% and 107,1% for value and volume in five years after AD,

respectively. This paper also indicates that there is no association between AD and price of

Vietnam export. We find very little evidence that Vietnam footwear firm’s revenue, labor

payroll and jobs have association with AD. It is only small firms decline revenue, but small

firms contribute only 1.65% total revenue of footwear. And, there is no evidence that

footwear firm discharge their employees because of AD. We find the explanation for this

interesting phenomenon from trade diversion story. There is no evidence of product

diversion of Vietnam firms to EU. But, it is strongly evident that Vietnam firms significantly

diverse their markets toward U.S.

Keywords: Antidumping, Vietnam Footwear

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LIST OF FIGURES

Figure 2.1. Home Import Demand ................................................................................................................. 7

Figure 2.2. Foreign Export Supply Curve....................................................................................................... 8

Figure 2.3. Impact of tariff on import price and volume ................................................................................. 9

Figure 2.4. Effect of tariff on social welfare in case of large country ............................................................ 11

Figure 2.5. Effect of tariff on Home demand in case of small country .......................................................... 11

Figure 2.6. Effect of export subsidy on export country ................................................................................. 13

Figure 2.7. Infant Industry Protection .......................................................................................................... 14

Figure 2.8. Impact of reciprocal dumping on welfare ................................................................................... 18

Figure 2.9. Conceptual framework............................................................................................................... 24

Figure 3.1. Top five Vietnamese export goods exclude oil in 2004............................................................... 26

Figure 3.2.Top five footwear exporters to EU .............................................................................................. 27

Figure 3.3. EU import Vietnam AD footwear and non-AD footwear ............................................................ 29

Figure 4.1. Difference in Difference Method................................................................................................ 41

Figure 4.2. Trend of export value, quantity, price of Vietnam AD Footwear and control groups to EU ......... 44

Figure 4.3. Some main Vietnamese export goods......................................................................................... 55

Figure 4.4. Trend of export value, quantity, price of Vietnam Non-AD Footwearand control groups to EU .. 64

Figure 4.5. Trend of export value, quantity, price of Vietnam Footwear and control groups to USA ............. 70

LIST OF TABLE

Table 1.1. Merchandise exports by selected economy (USA, Canada, Mexico, Brazil, Argentina, China,

Japan, India, Australia and New Zealand, South Africa, Germany, United Kingdom, France, Italia) in billion

USD.............................................................................................................................................................. 1

Table 1.2. Vietnam Merchandise Trade in percent over GDP ......................................................................... 3

Table 1.3. Vietnam export to EU in million USD........................................................................................... 4

Table 3.1. EU AD on Vietnam and People Republic China Footwear........................................................... 28

Table 3.2.Vietnam AD footwear export value, volume, price to US compareto control groups ..................... 30

Table 3.3.Vietnam Non- AD footwear export value, volume, price to US compareto control groups ............ 32

Table 3.4. Descriptive Statistics of Vietnam Firms Characteristics ............................................................... 33

Table 3.5.Vietnam footwear export value, volume, price to US compareto control groups............................ 37

Table 4.1.Vietnam AD footwear export value to EU compares to control groups ......................................... 46

Table 4.2.Vietnam AD footwear export volume to EU compares tocontrol groups ....................................... 47

Table 4.3. Vietnam AD footwear export price to EU compare tocontrol groups............................................ 48

Table 4.4. Footwear firm’s revenue compares to Apparel over period 2004-2006......................................... 50

Table 4.5 Footwear firm’s revenue compares to Apparel over period 2003-2007.......................................... 51

Table 4.6.Footwear firm’s revenue compare to W.P.Tover period 2004-2006 .............................................. 52

Table 4.7.Footwear firm’s revenue compare to W.P.Tover period 2003-2007 .............................................. 54

Table 4.8.Footwear labor’spayrollcompare to Apparelover period 2004-2006 .............................................. 57

Table 4.9. Footwear labor’spayrollcompare to W.P.Tover period 2004-2006 ............................................... 58

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Table 4.10. Footwear firm’s sizecompare to Apparelover period 2004-2006 ................................................ 60

Table 4.11. Footwear firm’s sizecompare to W.P.Tover period 2004-2006................................................... 61

Table 4.12.Vietnam non-AD footwear export value to EU compares to control groups................................. 65

Table 4.13. Vietnam non-AD footwear export volume to EUcompares tocontrol groups .............................. 67

Table 4.14.Vietnam non-AD footwear export price to EU compares to control groups ................................. 68

Table 4.15. US Import value of Vietnam footwear compares tocontrol groups ............................................. 72

Table 4.16.US Import volume of Vietnam footwear compares tocontrol groups ........................................... 73

Table 4.17.US Import price of Vietnam compares tocontrol groups ............................................................. 74

Table A.1Footwear labor’spayrollcompare to Apparelover period 2003-2007 .............................................. 87

Table A.2. Footwear labor’s payroll compare to W.P.T over period 2003-2007............................................ 87

Table A.3 Footwear firm’s size compare to Apparel over period 2003-2007 ................................................ 88

Table A.4Footwear firm’s sizecompare to W.P.Tover period 2003-2007...................................................... 89

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Contents

Chapter 1: Introduction.................................................................................................................................. 1

1.1 Research context and problem statement ........................................................................................ 1

1.2 Research objectives:....................................................................................................................... 4

1.3 Research questions:........................................................................................................................ 4

1.4 Research methodology, data and scope........................................................................................... 5

1.5 Thesis structure.............................................................................................................................. 5

Chapter 2: Literature Review......................................................................................................................... 6

2.1 Theoretical Review ........................................................................................................................ 6

2.1.1 Market analysis in context of Trade in a single industry .......................................................... 6

2.1.2 Effect of a tariff...................................................................................................................... 8

2.1.3 Export subsidies ................................................................................................................... 12

2.1.4 Dumping .............................................................................................................................. 13

2.1.5 Antidumping Duties ............................................................................................................. 18

2.2 Empirical Review......................................................................................................................... 21

2.3 Conceptual Framework ................................................................................................................ 23

Chapter 3: An overview of Vietnamese Footwear Industry........................................................................... 26

3.1 EU tax rising on Vietnamese footwear.......................................................................................... 26

3.2 Data Description .......................................................................................................................... 29

3.2.1 EU Import 8-digit (CN8) Data .............................................................................................. 29

3.2.2 Vietnam Enterprise Survey Data........................................................................................... 33

3.2.3 US Import 10-digit (HTS10) Data......................................................................................... 36

Chapter 4: Model Estimation and Research Findings ................................................................................... 39

4.1 Double Difference Approach........................................................................................................ 39

4.2 Double Difference in Multiple Years............................................................................................ 41

4.3 Estimation Impact of EU Antidumping on Vietnam Footwear Export ........................................... 42

4.4 Estimation Impact of EU Antidumping on Vietnam Footwear Firms............................................. 49

4.4.1 Firm revenue ........................................................................................................................ 49

4.4.2 Firm size and labor payroll ................................................................................................... 56

4.5 Trade Diversion ........................................................................................................................... 62

4.5.1 Product Diversion................................................................................................................. 62

4.5.2 Market Diversion.................................................................................................................. 68

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Chapter 5: Discussion and Conclusion ......................................................................................................... 76

5.1 Conclusion Remarks .................................................................................................................... 76

5.2 Policy implications....................................................................................................................... 77

5.3 Limitation and future direction ..................................................................................................... 77

References................................................................................................................................................... 79

Appendix 1.................................................................................................................................................. 83

Appendix 2.................................................................................................................................................. 87

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