Apr 1, 2013

Vietnam - Where will you go, Vietnamese products?

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VietNamNet Bridge – The recent decision of the US to impose anti-dumping duties on Vietnamese catfish makes pessimists worry: will the liberalization of trade be washed away?

Catfish is the latest product in the list of items of Vietnam that are imposed with anti-dumping and subsidies outside the territory of Vietnam. The list includes the products that are extremely "gentle," such as onions, bitter melons and basil in the EU market; lighter in Poland; tire and garlic in Brazil; PE bags, hangers, earrings, cold rolled steel, bicycles in the EU and the USA, etc.

According to the Competition Management Agency, from 1995 to 2012 Vietnam’s export items were involved in 62 commercial-defense investigations, including 40 cases of anti-dumping investigation.

Especially when the global economic situation is in crisis, the number of "investigation" is on the rise. In 2012, there were 10 cases of "anti-dumping and subsidies investigation" conducted on Vietnam's export goods. In early 2013, Vietnam’s catfish was imposed with the anti-dumping duties.

The anti-dumping and anti-subsidy lawsuits are essentially the double taxes on Vietnamese export goods, which have caused enormous consequences. Because of these lawsuits, many Vietnamese enterprises have been hardly hit.

In Vietnam's main export markets such as the U.S., Canada, the EU ... the lawsuits against Vietnamese goods are more and more and that is the risk for Vietnamese exporters. Many companies went bankrupt because of this.

Where's the "free trade?"

Experts often say that the world has two UNs, a UN of Mr. Ban-ki-moon, which is specialized in political issues, and the other is the WTO (World Trade Organization) US, which is in charge of commercial issues.

The WTO came into being in 1995 to replace the General Agreement on Tariffs and Trade, GATT, which was formed in 1947, with the highest goal towards global trade liberalization. The WTO has 157 members, not less than that of the UN of Mr. Ban-ki-mon.

There was a time when people thought they "had touched" the dream of trade liberalization. But the road is increasingly tough and has more obstacles because of the specter of protectionism.

The U.S. and many European countries are the "co-authors" of the idea of trade liberalization. But there is a "full of logical paradox" is that if not properly decoding the nature of it, a country will be very difficult to access to modern trade and will suffer from lawsuits like Vietnam.

Christina R.Sevilla, deputy U.S. trade representative said: "The fact is clear -- free trade creates wealth for the society, meets the needs and promotes economic development."

On the 10th anniversary of the WTO, dated 14/9/2005, U.S. President George W. Bush solemnly declared: "We will try our best to help difficult regions get rid of the burden of poverty. But it is not only this time -- it is a consistent, long-term task. The surest way to reach richness and prosperity is to promote free trade."

The US tasted the bitter fruit of protectionism, so it soon enlightened about trade liberalization. However, even in America, the battle between protectionism and trade liberalization takes place harsh and drastic.

US Trade Deputy Representative Christina R.Sevila admitted: "The US has concluded this lesson after applying the Smoot-Hawley Tariff Act in the 1930s. Since then, the US has been a pioneer in opening up the international market ... However, it needs more effort to really exploit the benefits of open trade in the agricultural sector ... The World Bank's research show that there will be tens of millions more people escaping from poverty through trade improvement."

Identifying protectionism

During the Great Depression of the 1920s and 1930s, the protectionism rose in many countries, especially in the US. Republican candidate Herbert Hoover in the election campaign committed to increase tariffs on imported agricultural products to support farmers after commodity prices continued to decline. When the bill was presented to the Congress, interest groups of the industry added more tariff protection measures.

The issuance of the Smoot-Hawley Tariff Act in June 1930 made the tax rate of US to the highest level in the history. Many affected countries immediately retaliated, by erecting similar tariff barriers. Consequently, global trade seriously declined. In 1934, the world trade turnover was only equal to three quarters of 1929, before the Smoot-Harley Act was issued. According to analysts, the consequences of the economic downturn were the seed for the World War 2 six years later.

However, this result did not prevent the protectionism. Global trade negotiations stopped down the extreme of the protectionism but could not overwhelmed it. The textile and auto industries are the two most obvious evidences of protectionism in the US.

From the '50s, developing countries began to compete with manufacturers in Europe and the United States, which led to the issuance of the multilateral multi-fiber agreement in 1974 with very high tax rates and import quotas on each item. According to the WB, because of the protection of the textile industry, American consumers lost $20 billion annually due to higher prices for clothing. To keep job for a textile worker in the U.S. or Europe, 35 workers in developing countries lose their jobs!

President R. Reagan passionately advocated and supported free trade but he was the one imposing the harshest quotas on Japanese cars in the U.S. in 1981. The "culprits" behind this decision were the three giant auto manufacturers - Ford, Chrysler and General Motors. They argued that the auto industry created a lot of jobs in the US. In fact, the three auto producers were based in the states of Michigan, Ohio and Illinois, which have great influence on American politics over the election of the Congress and the President.

Duy Chien

To be continued

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