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Vietnam Protests EU Tariffs on Shoes

Vietnam is protesting the European Union's new anti-dumping tariffs on Vietnamese shoes. The European Union trade commissioner imposed the tariffs on Vietnamese and Chinese shoes in March, saying those countries have been dumping shoes on the European market.

For the past five years, Vietnamese and Chinese shoe manufacturers have been running roughshod over their European competitors. European imports of Vietnamese shoes doubled from 2001 to 2005, and imports of Chinese shoes went up 1,000 percent. Meanwhile, shoe production in the EU shrank by 30 percent. The EU says 40,000 European shoe workers have lost their jobs.

The EU contends that much of the Chinese and Vietnamese footwear is produced with illegal government subsidies. Felipe Palacio Sureda, the EU trade representative in Hanoi, says Vietnamese companies receive government land for their factories at below market rents, and other subsidies.

"There are loans with no interest rates, also subsidized loans by state-owned banks," he explained. "There are subsidies for export performance, which are prohibited by W.T.O. [World Trade Organization]."

Last week, the EU trade commissioner set tariffs of 16.8 percent on Vietnamese shoes to compensate for the alleged subsidies.

The Vietnam Leather and Footwear Association denies that the government subsidizes the industry. Association officials say the reason Vietnamese shoes are cheaper is the country's low wages.

The association says the tariffs threaten to end the jobs of 70,000 to 90,000 Vietnamese workers.

One of those workers is Phi Thi Bon, a supervisor at the Dong Anh Footwear Company, outside Hanoi.

Bon fears the tariffs will fall heavily on an underdeveloped country like Vietnam, and may cost some workers their jobs.

As a senior worker, Bon earns about $75 a month; beginners can make up to $50, if they are willing to work 60 hours a week or more.

These are fair salaries, by Vietnamese standards. But they are a fraction of the wages in European countries.

Nguyen Hong Chuong, vice director of Dong Anh Footwear, thinks the EU tariffs are a mistake.

"I think they're wrong, because we are processing orders from our customers' orders, from Europe," he said. "They send us the material."

Chuong says his factory's only input is labor, and low wages are the reason he can out-compete Europe. If the tariffs come into effect, he thinks production will shift away from Vietnam, but not back to Europe.

"To some other countries in the, ASEAN countries. For example Indonesia, Thailand, or Laos," he noted.

Inside the Dong Anh factory, shaped forms of leather and plastic are piled next to sewing machines. They bear the logos of European brands like Diadora and Le Coq Sportif.

Phi Thi Bon, worried about her job, has only limited sympathy for European shoemakers who lose their jobs.

In developed European countries, Bon said, laid-off workers receive unemployment allowances. In Vietnam, they will not. The international community, she thinks, should take that into account.