Suppose a Vietnamese shoe manufacturer is selling shoes to the European Union for $10 a pair, while he sells those same shoes for $15 a pair in Vietnam. If the cost per pair of shoes is $12, the European Union

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The situation described indicates that the Vietnamese shoe manufacturer may be engaging in dumping, which is the practice of selling goods in a foreign market at a lower price than in the domestic market. This can harm domestic producers in the foreign market and is regarded as an unfair trade practice. The European Union could therefore charge the Vietnamese shoe manufacturer with dumping. The other options (infant industry argument, national defense argument, comparative advantage) do not apply in this situation.

Suppose a Vietnamese Shoe Manufacturer Is Selling Shoes to the European