At Risk Industries in Anti Dumping Actions

1. At Risk Industries in Anti Dumping Actions Training Workshop Ministry of Trade - CEG

2. Issues Factors triggering antidumping actions Domestic industries attacked by anti dumping claims Preliminary findings of at risk industries Some policy implications

3. Factors triggering antidumping actions Factors triggering AD actions include political and economic, macro-economic and industry specific Some factors include: Macroeconomic: trade liberalization pressure (removal of tariffs and NTBs), trade balance pressure, import growth rate, unemployment.. Industry specific: declining competitive advantage, industry concentration, industry import growth rate, decreasing import price.. Political: lobby power of producers association, consumers and importers association, political relationship, retaliation behavior.. Others: domino effect, cumulation technique, non market economy..

4. Factors triggering antidumping actions - Macroeconomic factors Macro economic pressures: declining economic environment, competition by imports causing pressures on domestic industries-> cause AD actions Trade liberalization pressure: negative relation between tariff reduction and AD use-> AD as a new protection measure

5. Factors triggering antidumping actions � Comparative advantage of exporters Developing countries often attacked in resources and labor intensive industries where they have comparative advantage (textiles, footwear, steel..). Also developing countries often target other countries in science based industries where they have less comparative advantage Developed countries are often attacked in science based industries (chemicals, plastics, machinery, vehicles, ..) In the US, 40% of initiations aim at chemicals.

6. Factors triggering antidumping actions � Political power and corporate strategy High concentration of industry: more likely that AD are filed (lobby power increase with industry concentration) . Power struggle among interest groups( Association of producers, consumers, importers) A handful of companies behind AD cases with a high degree of company concentration, e.g. in EU, Philips International and Thomson Consumer Electronics: 2/3 of cases involved in televisions, radios. Similarly in US: U.S Steel, Georgetown, Bethlehem Steel, Armco Steel, Atlantic Steel, or LTV Steel behind most initiations in steel sector

7. Factors triggering antidumping actions � Echoing AD: learned strategic behavior � proliferation across countries and industries China example: 75% and 68% of all cases attacked by the US and EU echo within 1 year during 1980-2000, particularly in steel, textiles, footwear -> AD has become a �domino effect� among countries and industries

8. Factors triggering antidumping actions � Cumulation Aggregate all like imports from every country under investigation and assessing their combined effect Cumulation brings a significant affirmative-finding bias Negative effects on countries with small import market shares Examples of Vietnam (AD cases of garlic, gas lighters, shrimps...)

9. Factors triggering antidumping actions � Non Market Economy Use surrogate (another) country prices for �normal values� � Arbitrary EU: list of NME countries, US: case-by-case NME: Main targets of AD investigations and definitive AD duties China: typical example. Similar with Vietnam and other transitional economies

10. Factors triggering antidumping actions � Other factors Retaliation motive: countries file AD actions against countries that have previously investigated them Limitations in legal and regulatory framework restrict ability to deal with AD initiations effectively (lack of lobby or PR activities, lack of retaliatory ability...) Avoiding AD measures: enterprises use the certificate of origin of another country. E.g.: fluorescent lamps which originate from China but exported to EU via Vietnam have been investigated recently

11. Factors triggering antidumping actions � Empirical Studies Use data of 84 countries (57 developing countries and 27 developed countries during 1995-2003). Source of data: WTO, WB Findings: Number of AD cases against each targeted country is positively correlated with export growth rates. Similarly a positive trade balance will prompt AD fillings against the export country Developing countries are more likely to be anti-dumping targets Developing countries with comparative advantage in labor-intensive industries are more likely to be anti-dumping targets

12. Domestic industries attacked by anti dumping claims  During 1994-12/2004, there have been 18 initiations against VN exports, of which there have been 8 cases where duties have been imposed Products attacked include fisheries (tra and basa fish, shrimps), agricultural products (rice, garlic, flour), metal related products (metal rings, zinc oxide, bicycles, steel tubes, inox door bolts), footwear, gas lighters, ....

13. Domestic industries attacked by anti dumping claims Number of investigations increased remarkably in recent years (in 1994, there was 1 case, but in 2004, it shot up to 6 cases) EU attacked the most (9 cases), followed by the US (2 cases) and Canada (2 cases). Other initiators include Columbia, Poland, Turkey, Peru. Products attacked belong to industries where Vietnam has comparative advantage in resources, cheap labor and are among main VN exports (fisheries, agricultural products, footwear....)

14. Overview of Vietnam Exports Main VN exports include crude oil, textiles and garments, footwear, aquaculture, agricultural products, electronics, handicraft... Trend of increasing exports volumes, diversifying export markets

15. Overview of Vietnam Exports

16. Overview of Vietnam Exports

17. Preliminary findings of at risk industries Main Vietnam exports: belong to resources and labor-intensive sectors (where Vietnam has comparative advantages) -> vulnerable to AD Initiating countries against Vietnam will extend beyond �traditional� users to other countries when VN diversifies its export markets NME status, �cumulation� technique, incomplete legal framework make Vietnam vulnerable Also watch out for competing countries which export to the same regions/countries due to �cumulation technique�

18. Preliminary findings of at risk industries Some new exports (though still small in volume) belong to the sectors being hit the most by AD suits: chemicals, mechanical products, electrical products, plastics.... The US is collecting information on VN textiles industry, EU and Canada investigated VN footwear (in 1998 and 2002), EU investigating VN metal-related products (bicycles, steel tubes, door bolts....), rubber and plastics are new exports with not high volume but could be at risk due to cumulation technique Preliminary findings: At-risk industries include textiles, footwear, wood furniture, electronics, metal-related products, handicraft, rubber, plastics, aquaculture, agricultural

19. Recommendations to Associations To forecast the AD risk, industry associations need to evaluate all relevant factors of their domestic industries and those of import-competing industries in export markets Factors to be considered include all political and economic, technical and strategic ones, such as industry concentration degree of domestic industry of export markets, comparative advantage, unemployment in the industry, lobby power of producer association, of consumer association, price fluctuation of imports, import growth rates, cumulation ability.... To implement this, each industry association could construct a database for each product of the industry for each export market and to design an information analytical process to identify �sensitive indicators� This work will require efforts and participation of multiple parties including industry and business association, consumer association, statistics office, customs office, trade representatives of Vietnam abroad...

20. Some Implications To mitigate the risks and effectively deal with AD actions, concerted efforts of all concerned parties (government, associations, enterprises) Government: build up capacity, seek to remove NME status, complete legal and regulatory framework related to AD, try to receive WTO membership Associations and enterprises: closely watch the market trends to get early warnings (information could be through media, lawyers, associations, trade representatives ...), diversification of export markets and products, cooperate with consumer associations and related interest groups of export countries, cooperate with investigators during investigations, e.g. providing information, filling in questionnaires..., implement PR and advocacy activities