CASESCase 8-1: Asian Shoe Exports to Europe: The AssignmentOverview: Europe is famous as a source for fine leather goods such as handbags and shoes. Each year, consumers in Europe buy 2.5 billion pairs of shoes. Shoes from China currently account for about one-third of the market; since 2001, when China joined the WTO, Chinese imports have increased tenfold. Imports from Vietnam have doubled in the same period (see Exhibit 8-1). The flood of shoe imports from China and Vietnam has been a boon for European retailers and value-conscious consumers. Officially, the EU tariffs on Chinese and Vietnamese shoe imports are known as antidumping duties. In general, such tariffs reflect a finding that products are being sold in export markets ...view middle of the document...
To prove dumping, investigators have only to compare the cost of the imported shoes with the prices of shoes produced in true market economies where the laws of supply and demand determine costs and prices. In such a comparison, the Chinese and Vietnamese appear to have a significant price advantage.When tariffs are imposed on European imports of shoes from China and Vietnam, who stands to gain? Who stands to lose?Gainers include China and Vietnam and other low cost producing economies and countries like the United Kingdom, Ireland, and Sweden that oppose tariffs. The "losers" may include EU consumers where the price of a pair of woman's boots would include more than $8.00 with the tariffs imposed.European policymakers object to the fact that some Asian shoe production is government subsidized. But as, an editorial in the Financial Times noted, "If Beijing and Hanoi want to subsidize European consumers to build their shoe collections, let them." Do you agree?Student answers will vary depending upon how they feel about low cost consumer goods versus antidumping policies and opinion of strategic issues and industries versus consumers.Antidumping duties can be described as a form of protectionism. As the global economic crisis deepened in 2008 and 2009, many countries began implementing protectionist policies. Is this a positive trend, or are such policies likely to prolong the recession?Increased tariffs lead to higher retail prices which in turn can decreases consumer purchasing power. Higher tariffs from one country can spur increased sales from the "non-affected" producing country. There is no right or wrong answer to this question, nor is there a definitive agreement about the effectiveness or ineffectiveness of tariffs on national economies.
