Luận án: Hiệp định EVFTA và Tác động đến Ngành Công nghiệp Da giày Việt Nam

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY DISSERTATION THE EU-VIETNAM FREE TRADE AGREEMENT (EVFTA) AND ITS IMPACTS ON VIETNAM FOOTWEAR INDUSTRY Major: Master of International Trade Policy and Law Student: Nguyen Khanh Chi Supervisor: Assoc. Nguyen Thi Tuong Anh Hanoi - 2016 I ACKNOWLEDGEMENT I would like to express my deepest appreciation to all people who gave me help, support and encouragement so that I can complete this Master‟s thesis. First of all, I would like to show my heartfelt gratitude to my direct supervisor, Ms. Nguyen Thi Tuong Anh, Assoc.

Thanks to her care and guidance, I could understand, develop and complete my thesis. From the bottom of my heart, I wish all the best things will come to her. Next, it is an honor for me to thank all professors of the International trade law and policy program, Foreign Trade University in cooperation with the World Trade Institute of Berne, Switzerland for the knowledge and support. Finally, I owe my warm thanks to all members in my family and friends who always supported and encouraged me to fulfill the thesis.

COMMITMENT I hereby confirm that the thesis is my own research under guidance of Assoc. Nguyen Thi Tuong Anh. Contents and result of the research are true. Information and data, collected from various sources for analysis and evaluation, have been stated in references of the thesis.

Student Nguyen Khanh Chi II TABLE OF CONTENTS INTRODUCTION .1 CHAPTER I: THEORETICAL BASIS OF FREE TRADE AGREEMENT AND INTRODUCTION TO THE EVFTA. Theoretical basis of FTA. Concept of the FTA. Types of the FTA.

Main content of the FTA. Role of the FTA. Impact of a FTA on an industry and an economy of a country. FTA’s impact on member countries.

FTA’s impact on an industry. Overview of the EVFTA. Introduction to the EU. Context of the EVFTA .21 CHAPTER II: IMPACTS OF THE EVFTA ON VIETNAM FOOTWEAR INDUSTRY.

Overview of global and Vietnam footwear industry. Circumstances of footwear industry in the world. Background of footwear industry in the EU. Situation of footwear industry in Vietnam.

Impacts of the EVFTA on Vietnam’s footwear industry .66 CHAPTER III: RECOMMENDATIONS FOR VIETNAM FOOTWEAR INDUSTRY IN THE CONTEXT OF THE EVFTA. Forecast of the world footwear situation. Orientation of Vietnam government towards development of Vietnam‘s footwear industry. Orientation for Vietnam footwear industry.

Orientation for Vietnam footwear supporting industry. Recommendations for Vietnam’s footwear industry in the context of the EVFTA. For the government. For Vietnam footwear association.

For Vietnam enterprises. viii IV LIST OF TABLES Table 2.1 Amount of footwear produced by Vietnam between 2012 and 2014 .2 Scale of Vietnam footwear industry (in 2013).3 GSP rules of origin – Chapter 64 .4 Annex 4a of the EVFTA .5 EU‟s tariff on shoes imported into the EU.1 Shoes production and average growth, 2020 .74 V LIST OF FIGURES Figure 2.1 World Top 10 footwear producing countries, 2015 (million pairs) .2 World top 10 footwear consumers, 2015 (million pairs) .3 World top 10 exporters, 2015 (million USD) .4 World top 10 importers, 2015 (million USD) .5 EU footwear exports, top ten EU countries (million USD).6 EU exports of footwear by leading countries (million USD) .7 EU footwear imports, top ten countries, 2011 -2015 (million USD) .8 EU imports of footwear by leading countries (million USD). The EU‟s turnover of shoes imported from Vietnam (million USD).10 Vietnam's top 07 imports in 11 months of 2016 (billion USD) .11 Vietnam's top 07 imports from the EU in the first half of 2016 (million USD).12 Global value chain of footwear .1 Forecast of the world footwear development, 2011-2018 .2 Footwear retail sales through store, 2011-2018 (million USD) .3 Asia-Pacific footwear market forecast, 2011-2018 (million USD) .70 LIST OF GRAPH Graph 2.1 Smiling curve of Stan Shih .63 VI LIST OF ABBREVIATIONS ASEAN Association of Southeast Asian Nations Convention on International Trade in Endangered Species of Wild CITES Fauna and Flora CSR Corporate Social Responsibility EC European Commission EMAS Eco-Management and Audit Scheme ENs EU Standardization and standards EU European Union EVFTA EU-Vietnam free trade agreement FDI Foreign direct investment FTA Free trade agreement GATT General Agreement on Tariffs and Trade GPSD General Product Safety Directive 2001/95/EC GSP Generalized Scheme of Preferences IPRs Intellectual Property Rights LEFASO Vietnam leather, footwear and handbag association MFN Most-favored-nation MUTRAP The Multilateral Trade Assistance Project PCA Partnership and Cooperation Agreement REACH Registration, Evaluation, Authorization and Restriction of Chemicals ROOs Rules of origin SPS Sanitary and Phytosanitary Measures TBTs Technical barriers to trade UK United Kingdom US United states VCCI Vietnam Chamber of Commerce and Industry WTO World Trade Organization 1 INTRODUCTION 1. Rationale International economic integration and globalization which speed up bring benefits and economic development for countries, on the basis of fair trade and investment.

With an increasing number of free trade agreements which Vietnam has signed with other countries or regions, Vietnam has more favorable opportunities for development of domestic industries, including footwear industry. Footwear industry, among national key industries, is planned in Vietnam‟s export strategy to the world market. Through footwear export activities, Vietnam has gained a considerable amount of foreign currency. Exported footwear plays an important part in Vietnam.

Export turnover of footwear industry ranked fourth in Vietnam total export turnover in the first eight months of 2016. Vietnam is the world‟s second largest shoes exporter and third largest shoes producer in 2015.With rapid growth and high export turnover in many years, Vietnam's footwear industry has exported shoes to many countries and regions around the world, and become a partner of various developed economies, especially the United State (US), European Union (EU), Japan, Korea, etc. Among these export markets, the EU is considered to be a large market with its potentiality of shoes expansion and development. Despite the industry‟s development, there are still existing unfavorable factors affecting sustainability of the industry‟s development, for example, backward technology, unskilled workers, undeveloped supporting industry, etc.

In the context of participation in a free trade agreement (FTA) between the EU and Vietnam, it is expected that the EU-Vietnam free trade agreement (EVFTA), a new generation and comprehensive agreement will offer Vietnam footwear industry good chances to open export markets. Therefore, it is necessary to study, forecast and evaluate potential impacts of the EVFTA on Vietnam footwear industry. By implementing these tasks, Vietnam government and relevant enterprises may foster efficient footwear industry development as well as achieve short-term and long-term objectives to actively promote Vietnam shoes‟ position in both export markets and domestic market. Thus, it is decided that research of “The EU-Vietnam free trade 2 agreement and its impacts on Vietnam footwear industry" will be implemented.

Literature review The official negotiations of free trade agreement between Vietnam and the EVFTA have been gaining attention from not only Vietnamese but also foreign media, researchers and enterprises. Currently, there are a number of papers and research reports addressing EVFTA-related issues from different perspectives such as:  “The free trade agreement between Vietnam and the European Union: quantitative and qualitative impact analysis” report was published by The Multilateral Trade Assistance Project (MUTRAP) team in October, 2011. The research report was conducted by national and international experts under the framework of MUTRAP III so as to assess possible impacts of the EVFTA on Vietnam‟s economy in the future. In addition, the report analyzed the possible impacts on Vietnam‟s key industries such as textile, footwear, electronics, machinery and banking.

It also provided recommendations for Vietnam to have sustainable economic growth. In the matter of footwear, quantitative assessment through SMART simulation methodology was used in the report to evaluate the impact of the agreement on Vietnam footwear industry. The quantitative analysis was implemented with four different scenarios and the results of the four scenarios were that the FTA would enhance Vietnam‟s shoes export activities and promote market shares of the country in the EU‟s market. However, it was mentioned in the report that the impact of the EVFTA on domestic footwear industry might not fully be evaluated since the author did not include in the assessment impact of institution and regulation reform when the agreement came into effect.

 Vietnam Chamber of Commerce and Industry (VCCI) issued the report “Vietnam enterprise community‟s recommendations on outlook of the EVFTA” based on public opinions, researches of the chamber‟s Committee on International Trade Policies and recommendations of relevant Vietnam industry associations in 2011. The report analyzed the benefits and disadvantages that the EVFTA might bring to domestic economy and recommended FTA negotiation options which 3 would be most beneficial for Vietnam. However, the report just provided general recommendations for the country and did not cover specific recommendations for Vietnam industries.  The paper “Future Vietnam-EU free trade agreement (Vietnam-EU FTA): an analysis of trade creation and trade diversion effects” of Nguyen Binh Duong and Nguyen Thu Trang, co-author was released in 2014.

In the report, the authors used theory of trade creation and trade diversion in international trade to evaluate impacts of EVFTA on Vietnam‟s welfare. With the usage of gravity model and implementation of national data analysis, the report showed that when the EVFTA took effects, application of tariff elimination or decrease would have positive impacts on bilateral trade between Vietnam and the EU.  In 2014, MUTRAP team announced “Sustainable impact assessment: EU- Vietnam FTA” report in 2014. The report presented an overview of overall impacts from the Vietnam – EU FTA using standard framework to implement evaluation.

The report which was conducted per request of the Government of Vietnam used quantitative methods (through economic modeling and data analyzing) and qualitative methods (through surveys, consultations and research). It also listed a number of opportunities and challenges that Vietnam footwear industry could meet as well as provided some recommendations for the industry.  In 2004, “Free trade agreement between the EU and Vietnam: difficult partnership” paper of Rabea Brauer, Vu Dang Tuan and Natalie Frey analyzed the benefits and challenges that the EVFTA might pose to Vietnam„s economy. It was concluded that because the agreement might bring Vietnam more opportunities (enhance trade relation with the EU, maintain its political position, etc.) than challenges and challenges was supposed to be a part of the growth process that Vietnam had to experience, it was necessary for Vietnam to enter a free trade agreement with the EU.

 The paper “Vietnam-EU free trade agreement: Impact and policy implications for Vietnam” was published by Nguyen Binh Duong on June 2016. The paper evaluated effect of EVFTA on trade between Vietnam and the EU. With decrease of 4 tariffs, trade between the two partners would experience positive effects from the EVFTA. Opportunities and challenges from the EVFTA for Vietnam were also mentioned in the paper.

With reference to the above-mentioned reports and papers, most of them analyzed the impact as well as opportunities and challenges that the agreement might create for Vietnam's economy. Among them, MUTRAP‟s report in 2011 evaluated the impact of the EVFTA on Vietnam footwear industry through quantitative analysis. However, the assessment had limitations and did not fully evaluate the impact of the agreement on the industry. MUTRAP‟s report in 2014 stated opportunities and challenges for Vietnam footwear industry after the agreement was reached but the relevant content was very briefly.

In general, most of the documents focused on the agreement‟s overall impacts on the national economy. They did not cover detailed analysis of possible impacts on Vietnam footwear industry, or recommendations for the industry to take advantages or overcome challenges provided by the EVFTA to promote Vietnam‟s footwear export to the EU‟s market or promote the industry‟s position in the global value chain.