Footwear manufacturers prepare to fight back

Vietnamese leather and footwear business have said that they now have sufficient evidence to argue against the current anti-dumping investigation by the European Commission (EC). The EC investigation has found that eight of the country's leather and footwear companies failed to satisfy EC market economy criteria. However, Nguyen Duc Thuan, vice chairman of the Viet Nam Leather and Footwear Association (Lefaso), said the EC investigation was implausible when analysing all the criteria. Five criteria need to be met for a country to be recognised as a market economy, including business operation costs within the market; international standard accounting; the exchange rate; laws on bankruptcy and property; and the ability to control the subsidised economic system. The EU investigation called for a 130% tariff rate on Lefaso's products, a move that would impact some one million employees in the industry. Laura Atlee, lawyer on behalf of the Lefaso members, pointed out that it was unreasonable to jump to the conclusion that the firms inspected could not comply with the majority of the criteria concerning business operation costs. She claimed that EC inspectors did not completely understand Viet Nam's accounting and auditing norms, along with their land laws and Viet Nam's laws on foreign investment. Regarding the criterion on business operations, Atlee rejected the EC argument that Vietnamese exporters did not have the 80% export rate as regulated by Viet Nam's Investment Law to receive subsidies. She interpreted the EC argument as being out of line with the two decrees issued by the Vietnamese Government on Foreign Investment in Viet Nam. The first decree No.24/2000/ND-CP stipulates that investors have the right to choose investment projects, investment partners, place, time, market and ratio of share contribution in accordance with the investment law and the decree itself. Another decree No.27/2003/ND-CP is to provide companies with two levels of incentives. Accordingly, companies either exporting 80% of their products or employing over 500 workers may receive preferential tax treatment. Concerning the criterion on accounting and auditing norms, the EC argued that such standards applied in Vietnamese enterprises did not follow international norms. Lefaso, however, described the claim as groundless since the country's norms, in fact, complied with those set by the International Federation of Accountants of which Viet Nam is an acting member. The EC is now awaiting feedback from Lefaso member enterprises, whose response to the verdicts would be hard to predict, said a Lefaso official. Source: Daily Vietnam News