MADE-IN-VIETNAM GOODS UNDER PRESSURE OF TRADE REMEDY INVESTIGATION AND DUTY

25/03/2019, 11:27 AM

The successful ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) makes the landmark 12-agreement deal that Vietnam has embarked. Becoming one of the region’s fastest growing economies participating in many bilateral and multilateral agreements, Vietnam has its status cemented by strong exports and robust manufactures. However, benefits also come with risks. Many Vietnamese exported products are on the verge of being investigated and applied with trade remedies more than ever.

The number of trade remedies cases is increasing and will continue to rise.

According to statistics, from 2017 to November 2018, the number of trade remedies cases has increased significantly. In 2017, Vietnam was the defendant of 13 trade remedies cases, as of November 2018, the number had jumped to 29 cases. Amongst, there are 6 anti-dumping investigations, 4 anti-subsidy investigations and 19 anti- circumvention investigations.[1]

Global production value chains are increasingly expanding, linking many countries together, impacting from one country and spreading to others. That is also the reason why trade remedies cases arise new trends as follow: concurrent investigation (to concurrently investigate many countries); tax circumvention investigation (to invest a country to prevent the possibility of avoiding a tax measure imposed on another country); domino investigation (to initiate an investigation from country to country); dual investigation (to initiate simultaneously anti-dumping and countervailing investigation)2.

A number of Vietnam’s FTA partners, whilst a major export markets, are countries with the most precedent and experience in using trade remedies in the world, typically China, India, Malaysia and Thailand, Indonesia.

The range of subject products is varied.

Previously, only vast-export-turnover products such as seafood, leather and footwear were subject to investigation, but now, even products with minor export turnover are the objects being investigated, such as steel, woven bags, coat hangers, etc. For example, in 2017, almost all steel products (80% of steel products produced by Vietnam) are subject to trade remedies investigation.

Market expansion.

According to Trade Remedies Authority of Vietnam (Ministry of Industry and Trade), as of the end of November 2018, there were 141 trade remedies cases initiated by 18 countries and territories for Vietnamese exports. Amongst, the United States of America is the country that initiated the most investigation (27 cases, accounting for 20%); the second is Turkey (20 cases, accounting for 15%); third is India (17 cases, accounting for 12%) and the fourth is EU (14 cases, accounting for 11%).1 So far, the trade remedies investigation markets with Vietnam have increased to 19 markets. Besides the traditional markets, some new ones have appeared, such as Canada, Australia, ASEAN, and EAEU.

Stricter investigation methods.

The Investigating Authority does not select the mandatory defendant but expand the scope of investigation of all enterprises producing that product. Accordingly, many small businesses are also subject to investigation and must answer the Questionnaire.

Investigating period is stern. Enterprises (defendants) may ask for an extension of time to answer the Questionnaire. However, the extended time is not long, which makes it difficult to complete.

Available information is unfavourable when enterprises cooperate inadequately, or not even cooperating. Many enterprises have not met the requirements of investigating authority in providing documents, the systems for keeping documents, data, contracts, invoices are incomplete, not scientific and not systematic. Many Vietnamese businesses tend to avoid, not participate in or participate inadequately in the defending procedure. Part of the reason may be due to the lack of awareness of the importance in investigating collaboration, and the long-term harms which sometimes up to ten years of tax imposition, language barriers, burden of hiring consultants.

Impact on businesses.

The investigation and application of trade remedies by one or several markets shall reduce the benefits of obtaining tariff reductions under the FTA; the number of export of enterprises does not increase as expected, even decrease. In many cases, some enterprises abandoned the market applying trade remedies measures to discover new markets or invest into domestic market share, which increases competition in the home market.

The resources of an enterprise include human resources, money, time, and so forth shall be all manipulated in defending procedure, thereby affecting business operations.

Some recommendations.

To minimize the trade remedies investigation and increase the likelihood of success when participating in defending, enterprises should protect themselves by arming with essential knowledge of trade remedies law.

Enterprises should have the proper defending strategy, invest seriously, and cooperate completely with the Investigating Authority. In the first place, you can begin by establishing legal departments or can consult lawyers for beneficial advisory and valuable warning.

Enterprises can refer to the Early warning system of the Ministry of Industry and Trade of Vietnam or contact law firms for consultancy and updates of investigation information.

ATIM LAW FIRM

Website: www.atim.com.vn

Email: info@atim.com.vn

HCMC Office: 3F DMA Building, 45 Dinh Tien Hoang Str., Dist.1

Hanoi Office: 3F DMC Building, 535 Kim Ma Str., Ba Dinh Dist.

 

[1] According to statistics of the Trade Remedies Authority of Vietnam, Ministry of Industry and Trade.

2 According to Baomoi.com

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