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The Vietnam News

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China, Vietnam call EU anti-dumping measures unjusitified

BEIJING - China has slammed European Union anti-dumping measures on imports of leather shoes as illegal and threatened retaliation, as Vietnam complained it will pay a high price in lost earnings and jobs. "The anti-dumping measures taken by the EU against Chinese leather shoes lack a legal basis and factual evidence and harm the rights of Chinese leather shoe manufacturers," commerce ministry spokesman Chong Quan said Thursday.

"The Chinese side will closely watch this issue and see how it develops and will maintain the right to take corresponding measures." Chong said the EU case, its investigation into the dumping of the shoes as well as the adjudication process did not conform with anti-dumping regulations of either the EU or the World Trade Organization.

The European Union on Wednesday adopted, by the narrowest of majorities, the new anti-dumping measures to tackle the leather shoe imports from China and Vietnam. The vote to adopt the measures for two years resulted in a 13 to 12 majority in the 25-nation EU, diplomatic sources in Brussels said. The new anti-dumping measures come into force on October 7, with import duties of 16.5 percent on Chinese shoes with leather uppers, in place of the current temporary duty of 19.4 percent. The tariff on the same kind of shoes from Vietnam will be 10 percent in place of the current temporary duty of 16.8 percent.

Nguyen Gia Thao, president of Vietnam's Leather and Footwear Association (LEFASO), was quoted by the Vietnam News Agency as saying there had not been any "violations of international trade rules" to justify the levies. The final cost has yet to be calculated, VNA said, but "it is certain that it will affect the jobs of between 60,000 and 70,000 workers in the industry and some small-scale enterprises will face bankruptcy. "The EU's anti-dumping measures will not only cause difficulties ... for more than half a million Vietnamese workers ... in the leather and shoe industry, but also for many others whose jobs service the industry and who are already living under the poverty line," it said, citing the industry group.

China's Chong said that his government had noted that the new import duty on the leather shoes was lower than the existing temporary tax and that the tariffs would only be enforced for two years instead of five years. But, "Chinese enterprises in the industry express dissatisfaction in the latest decision," he said. Brussels stressed that the tariffs will only apply to shoes with leather uppers which account for around one in 10 pairs sold in the European Union. Last year China exported 1.2 billion pairs of shoes to EU countries, 145 million of which were hit by the provisional anti-dumping measures. For Vietnam the EU import figure was 265 million pairs, 80 million of which were affected. China exported 6.9 billion pairs of shoes to over 200 countries and regions last year, reaping a total revenue of 19 billion dollars, according to the Ministry of Labor and Social Security

Agence France Presse - October 5, 2006.


Vietnam dreads heavy damages from EU dumping taxes

HANOI - Vietnam's shoe industry will face massive losses and lose thousands of jobs due to the new European Union anti-dumping measures levied on its exports, state media says.

The EU on Wednesday adopted new anti-dumping measures on imports of leather shoes from China and Vietnam. Nguyen Gia Thao, president of Vietnam's Leather and Footwear Association, was quoted by the Vietnam News Agency as saying there had not been any "violations of international trade rules" to occasion the levies. The final cost has not yet been calculated, VNA said, but "it is certain that it will affect the jobs of between 60,000 and 70,000 workers in the industry and some small-scale enterprises will face bankruptcy.

"The EU's anti-dumping measures will not only cause difficulties ... for more than half a million Vietnamese workers ... in the leather and shoe industry, but also for many others whose jobs service the industry and who are already living under the poverty line," it said, citing the industry group. The EU agreed 13-12 in the narrowest of votes Wednesday to impose a standard duty of 10 percent on imports of Vietnamese leather shoes, replacing an emergency levy of 16.8 percent, effective for two years from October 7. It will impose a 16.5 percent duty on Chinese shoes with leather uppers, in place of the current temporary duty of 19.4 percent. EU Trade Commissioner Peter Mandelson described the measures as "appropriate and proportional."

Agence France Presse - October 5, 2006.


Vietnam counts cost of shoe penalties

HANOI - The European Union is to impose further tariffs on shoes made in China and Vietnam because of what it regards as unfair pricing. The new tariffs will last for two years - replacing temporary measures which have been in force since April. They are intended to protect European shoemakers from subsidised competition. But some of the biggest brand names in shoes say the new duties are not likely to result in any jobs moving back to Europe.

Working environment

At the Taiwanese-owned Stella Shoe Factory on the outskirts of Haiphong, a port city in northern Vietnam, 7,000 workers make shoes for the British company Clarks and US firm Timberland. It also makes shoes for a well known Italian designer label, but I am not allowed to tell you which one. As shoe factories go, it is a nice one. It is bright, cool and the workers have access to a clinic and welfare services. Graeme Fiddler, who is the Vietnam manager for Clarks, says he has been to plenty of other shoe factories in Vietnam which his company would never work with. "Clarks owners are Quakers, which means they try to live up to ethical standards," he says. The workers here earn on average between $60 and $80 per month. In Europe and North America that would be considered abominable. But in Vietnam it is double the minimum wage in the state sector.

Stable income

Through a translator, I asked Vu Thi Tham, a worker on the children's shoes production line, what she thought of her job. "Binh thuong", she said in Vietnamese: "It is OK". "I'm working here because the income is stable. Before I was a farmer and my income depended on the weather. If was good weather, I could make good money. But if it was bad weather I couldn't. Even in good times I could only make $30 per month but working here I can make $60 or more if I do overtime." The Stella plant is one of the hundreds of Vietnamese and Chinese shoe factories being hit by EU anti-dumping duties. The duties are intended to protect jobs in the EU against companies which are receiving unfair government subsidies. The original complaint was brought by the Italian footwear industry against Chinese firms. Vietnam was caught up almost by accident. The office of the European Commission in Hanoi asked the Vietnamese government to disprove the Italians' claims.

Financial mess

The government selected five factories and the EU auditors checked their accounts. What they found was a mess. The factories could not clearly account for their income and expenditure and they couldn't prove that they were not receiving subsidies whether in the form of direct government handouts or cheap land or bank loans. So every factory in Vietnam got tarred with the same brush - even those in the private sector, such as Stella, which get no government handouts at all. The Stella management say they've already lost a few contracts. But Clarks and Timberland who focus on quality and reliability say they're going to stick with their arrangements. However, other plants nearby are already in big trouble because they rely on agents and middle-men who arrange short run contracts based purely on where they can get the lowest cost.

Cancelled contracts

I visited another Taiwanese factory in Haiphong which employed 1,200 workers at the beginning of August. Now it's down to less than 100. Hundreds of sewing machines, each one costing $800, are sitting idle. The manager, Deng Deng, says that as soon as the agents saw that tariffs were going to be introduced they cancelled their contracts and disappeared to countries which were not going to be affected by duties. "Almost from the beginning of August the orders came down and now we can't get enough orders to support this factory," she says. "I know that it was because of the anti-dumping duty problem because this factory's output was 100% leather upper shoes the ones targeted by the EU - so it is absolutely affected by the duties."

Staying here

Despite the anti-dumping duties, Clarks won't be moving any jobs back to the EU, according to Graeme Fiddler. "No we definitely won't shift any production back to Europe," he says. "We'll keep most of our production here. What we will do is look into Cambodia and Thailand and India, because India is a growing economy and it already has a footwear industry," he says. Martin Salisbury, a Clarks director, says that he has a lot of sympathy with Italian producers; indeed his company buys three million pairs of shoes from Italy every year. However, he warns: "Some producers in Italy, even after decades of quota protection and EU state aid, have not modernised and cannot supply the volume, quality, choice and value demanded by the modern consumer. "It is a fallacy to believe that additional duties imposed on Vietnam will solve their problems when they still have to compete with the rest of the world." And ironically for the EU - one of the effects of the tariffs will be to force Vietnamese producers to be even more competitive on cost. So that when the tariffs are eventually lifted - the competition from this part of the world will be even more intense than it is now.

By Bill Hayton - BBC News - October 5, 2006.