European union – Vietnam free trade agreement and Vietnam’s footwear

Abstract

This study investigates the ex-ante impact of the proposed European Union – Vietnam Free Trade Agreement on Vietnam’s footwear industry using the partial equilibrium model called Software for Market Analysis and Restrictions on Trade. From the 2015 trade and tariff database between EU and Vietnam accessed through the World Integrated Trade Solutions, the authors construct different possible scenarios under three key policies of tariff elimination, rule of origin and trade defense. The results show that the EU’s tariff removal for the Vietnam’s footwear exports would increase Vietnam’s product export value, even under the anti-dumping policy. However, the EU’s trade defense still has a negative impact on Vietnam's most important export footwear group HS Code 6403. The simulation results also indicate that there would be a remarkable shift in the export structure of the groups of products which would enjoy high tariff preference.