Trade Diversion as Firm Adjustment to Trade Policy: Evidence from EU Anti�dumping Duties on Vietnamese Footwear

Trong Hoai Nguyen, Toan Nguyen, Van Pham

    Research output: Contribution to journalArticle

    Abstract

    This paper evaluates the impact of the 2006 European Union anti-dumping (AD) action on Vietnamese footwear in three markets: imports to the EU, footwear producers in Vietnam, and the trade diversionary adjustment of Vietnamese firms in the US market. We find that the AD action reduced Vietnamese imports to the EU by as much as 65 per cent. Given that the EU makes up almost two-thirds of Vietnam's footwear exports and footwear is among the top four export industries for Vietnam, this reduction is economically significant. Consistent with predictions of our model, we find evidence of trade diversion by Vietnamese producers from the EU to the US market. Our difference-in-difference estimates of the AD actions on the value of Vietnamese footwear imports to the United States ranged from 69 to 71 per cent over the period 2004–07 and 69 to 72 per cent in terms of quantity. These results highlight the spillover effects of trade policy in third markets when firms adjust to trade barriers. Our results are robust to triple-difference specifications where we adjust for trend differences and a series of placebo specifications.
    Original languageEnglish
    Pages (from-to)1128-1154
    JournalThe World Economy
    Volume40
    Issue number6
    DOIs
    Publication statusPublished - 2017

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