DOCTORAL DISSERTATION NON-TARIFF MEASURES, AID FOR TRADE AND EXPORTS IN VIETNAM AND OTHER DEVELOPING COUNTRIES Graduate School of International Social Sciences Yokohama National University LUU HAI DANG September 2021 Abstract This dissertation contributes to the literature on the effects of non-tariff measures in general and antidumping duties in particular, as well as aid for trade on exports of Vietnam and other developing countries. This dissertation is comprised of three chapters that are independent from each other. Chapter 1 examines the effects of non-tariff measures, technical and non-technical measures, imposed by Vietnam and importing countries on Vietnamese exports at the product level by employing the Poisson-Pseudo Maximum Likelihood method on a balanced panel data of nearly 5000 products for the period 2015 to 2018. The rationale behind using the Poisson- Pseudo Maximum Likelihood method is that my sample contains many zero trade values and may suffer from heteroskedasticity.
Hence, following the standard solution suggested in the gravity model literature, the use of the Poisson-Pseudo Maximum Likelihood method can help to obtain consistent and unbiased estimations. The estimated results indicate that the effects of NTMs imposed by Vietnam and importing countries can vary considerably across NTMs classifications, product groups and importing countries. In general, importers’ NTMs exert a positive impact on Vietnamese exports, while Vietnam’s export related NTMs are found to have a negative impact. For importers’ NTMs, the positive impact is driven by the technical category.
The non-technical measures do not have a significant effect on Vietnamese exports. Our estimates also suggest that the negative supply side effect of importers’ new technical measures tends to dominate their positive demand side effect. Additionally, the importers’ technical measures have stronger positive effects on intermediate goods in comparison to final goods. Vietnamese exports of intermediate goods to higher income countries are found to enjoy a higher positive impact of technical measures, compared to those exports to importing countries with a lower level of per capita income.
For NTMs voluntary applied by Vietnam on exported products, technical measures seem to be effective in increasing Vietnam’s exports of final products to importing countries with a level of per capita income below USD 11,462. For those importing country markets, the positive marginal effect of Vietnam’s export related technical measures on exports of final products is higher in poorer importing countries. On the other hand, the non-technical category tends to have negative effects on Vietnamese exports, especially on intermediate goods. Otherwise, we do not find a significant relationship between importing countries’ income level and Vietnam’s technical measures on intermediate goods nor on importers’ technical measures on final goods.
Chapter 2 considers a specific type of traditional non-tariff measure, specifically the antidumping duty. The chapter investigates the impact of the United States’ antidumping investigations on the prices received by Vietnamese shrimp exporters for the period of 2000M1 to 2011M12. Vietnamese shrimp was the target of an antidumping petition filed in late 2003 and Vietnam was treated as a non-market economy country in the investigation. The estimation is performed using the weighted least squares (WLS) method with the weight being the customs values of imported shrimp products, correcting for the possibility of heteroskedasticity to obtain estimators that are more precise than their ordinary least squares (OLS).
The estimates indicate that, after the final determination on the imposition of antidumping duty, Vietnamese shrimp exporters increased their prices by much more than 100 percent of the antidumping duties in an attempt to eliminate future duties. In addition, no evidence was found for a significant difference in the exchange rate pass-through of affected products. This result differs from the cases of the market economy examined in previous studies. Furthermore, our analysis shows that there might be an asymmetry of exchange rate pass-through to the border prices of affirmative products after the imposition of the final antidumping duties in complicated scenarios.
However, our empirical results did not support that prediction. This chapter offers a better understanding of non-market economy exporters’ pricing reaction to antidumping duties and may help trade policymakers when considering the gains and losses of implementing antidumping duties by using the treatment for a non-market economy. It is important to note that the higher the price due to antidumping duties, the larger the net welfare loss of the importing country that implements the antidumping duties, as shown in previous studies. Our analysis and empirical results revealed that if non-market exporters facing antidumping duties aim to eliminate the future duty, the prices received by non-market economy exporters tend to increase by more than 100 percent of the antidumping duties and, therefore, the net welfare loss for implementing antidumping duties is generally more substantial.
Finally, Chapter 3 investigates the effects of Aid for Trade on the sophistication level of recipient countries’ export baskets. Our empirical analysis relies on the sophistication index of exports proposed by Hausmann, Hwang, and Rodrik (2007) and a sample of 73 aid for trade - recipient countries from 2005 to 2017. It makes use of the two-step system generalized methods of moments (GMM), which is widely adopted to tackle potential endogeneity problems as well as the possible omitted variables biases and obtaining estimators that are unbiased and consistent. In this chapter, we treat all right-hand side variables except population size as endogenous variables.
According to Hausmann, Hwang, and Rodrik (2007), a causal effect from export sophistication to population size is very unlikely to occur. The results indicate that total aid for trade inflows do not benefit the export sophistication. Aid for trade for trade policy and regulations seems to be the only type of aid for trade that is found to be effective in low- income countries with a real GDP per capita of less than USD 3,047 and furthermore, the poorer the recipient country, the greater the positive impact on export sophistication. In contrast, the effect of aid for trade for economic infrastructure seems to be increasing in per capita income.
The positive and negative significant effects of aid for trade for economic infrastructure are observed for countries with real GDP per capita above USD 29,542 and below USD 2,558, respectively. Otherwise, there are no significant impacts of these two categories on export sophistication. Aid for trade dedicated to building productive capacity exerts a negative impact on the export sophistication at the sectoral level. The findings of this chapter have a number of practical implications on the future allocation of aid for trade.
A reconsideration on the allocation of aid for trade across activities, sectors and countries is necessary due to the limited and heterogenous effect of aid for trade on the sophistication of recipient countries’ exports. Technical support for trade policy and regulations should be the priority for least developed countries or countries with a low per capita income since this type of aid for trade seems to play an important role in these countries’ structural transformation of exports through the reduction of trade costs. In addition, trade aid for building economic infrastructure should be given carefully to countries with low-income level, since its short-run negative effect could cancel out the benefit of aid for trade for trade policy and regulations. Finally, based on the characteristics of each country, the productive capacity building support should be provided to develop potential sectors that have a high level of productivity and technology.
Acknowledgement Throughout the writing of this dissertation, I have received a great deal of support and assistance. First and foremost, I am extremely grateful to my supervisor, Professor Craig Parsons for his invaluable instructions, continuous support, and patience during my PhD study. Without his assistance and dedicated involvement in every step throughout the process, the completion of this dissertation would be impossible. I would also like to extend my deepest gratitude to my committee members, Professors Kiyotaka Sato, Shrestha Nagendra, Minako Fujio and Teru Nishikawa for their encouraging words and thoughtful, detailed feedback on the earlier versions of this dissertation.
I would also like to thank all the staff at the Graduate School of International Social Sciences, Yokohama National University for their assistance. Additionally, I am thankful for the kind support and comments from fellow PhD students and my friends at Yokohama National University. I acknowledge the generous financial support from the Japanese Ministry of Education, Culture, Sports, Science and Technology. Last, but not least, this journey would not have been possible without the support of my family.
I am especially grateful to my parents for their love and continuous encouragement. In addition, special thanks to my wife, who has been there to encourage, support and take care of our children throughout my time of study. Declaration The versions of chapters 2 and 3 have been published in the following journals: 1. Dang Luu Hai (2020), “Price Effects of the United States (US) Antidumping Investigations in a Non-Market Economy Case: Vietnam’s Shrimp Exports to the US”, The International Trade Journal, Taylor and Francis Journals, Volume 34 Issue 2, pages 179-200.
Dang Luu Hai (2021), “Aid for Trade and Export Sophistication in Recipient Countries”, Journal of International Trade and Economic Development, Taylor and Francis Journals, Volume 30 Issue 4, pages 530-548.1879900 Table of Contents Abstract Acknowledgement Declaration List of Tables List of Figures Chapter 1: Non-tariff Measures and Vietnam’s Export Performance. Methodology and data. 19 Chapter 2: Price Effects of the United States (US) Antidumping Investigations in a Non- Market Economy Case: Vietnam’s Shrimp Exports to the US. The US antidumping investigation in a non-market economy case.
The US AD case of Vietnamese shrimp products filed in 2003. 43 Chapter 3: Aid for Trade and Export Sophistication in Recipient Countries. Variables, methodology and data. Export sophistication, aid for trade and data.
Overall impact analysis. 69 List of Tables Table 1: Classification of Import related Non-tariff Measures. 9 Table 2: Classification of Export related Non-tariff Measures. 9 Table 3: List of Sample Countries and Available Years for NTMs Data.
11 Table 4: Descriptive Statistics of Variables. 12 Table 5: Effects of NTMs, technical and non-technical measures, on Vietnamese exports. 14 Table 6: Intermediate goods versus final goods. 15 Table 7: Robustness Checks.
18 Table 8: Shrimp HTS Codes to Producer Price Index Codes (NAICS) Concordance. 28 Table 9: Results of the AD Investigation and Administrative Reviews. 29 Table 10: Descriptive Statistics of Variables. 36 Table 11: Estimated Results of Pass-Through Regression.
37 Table 12: Price Responses of Vietnamese shrimp exports to the AD Duty Changes. 41 Table 13: Testing for Asymmetric Exchange Rate Pass-Through. 42 Table 14: List of Countries. 56 Table 15: Variable Descriptions and Summary Statistic.
58 Table 16: Aid for Trade and Export Sophistication in Recipient Countries. 61 Table 17: Aid for Trade and Sectoral Export Sophistication. 64 List of Figures Figure 1: Tariff liberalization and Vietnam's trade and economic growth. 1 Figure 2: Marginal Impact of technical NTMs as a Function of per capita GDP.
17 Figure 3: The Overall US Antidumping Investigation Timeline. 24 Figure 4: Export Sophistication Index for all sampled countries and groups, 2005 – 2017. 54 Figure 5: EXPY and GDP per capita. 55 Figure 6: Major Categories of Aid for Trade Disbursements.
57 Figure 7: Marginal Impact of the AfT Variables as a Function of per capita GDP. 62 Chapter 1: Non-tariff Measures and Vietnam’s Export Performance 1. Introduction Together with the wave of tariff liberalization around the world in recent decades, the successful implementation of the open-door policies and economic reforms since late 1980s have made Vietnam emerge as one of the largest beneficiaries of international trade, resulting in high economic growth rates. As shown in Figure 1, Vietnam’s trade amounted to over USD 400 billion in 2017, up from just about USD 5 billion in 1990.
At the same time, real GDP of Vietnam (based on constant 2010 USD) also increased significantly from nearly USD 30 billion in 1990 to over USD 175 billion in 2017.