Facing the pressure of trade remedies: Learn to ‘live with the flood’

10:50 | 19/04/2018

VCN–  Over time, a series of commercial defenses were initiated, but goods investigation remedy measures have extended the hardships and obstacles of exporting goods. It is expected that trade measure remedies applied by import markets will increase as Vietnam’s economy is increasingly integrated into the world economy, forcing businesses and industries to quickly improve their capacity to cope and accept “living with the flood”.

facing the pressure of trade remedies learn to live with the flood
Footwear industry is one of the industries facing trade remedies. Photo: S.T

Exports are more or less sued

According to the Department of Trade Remedies (MIT): Up to the present time, there have been 128 cases of trade remedies initiated by 17 countries and territories for Vietnamese goods. Among them, the United States investigated the most trade remedies (25 cases, accounting for 20%); Turkey is the second (19 cases, accounting for 15%); India is the third (15 cases, accounting for 12%) and EU is fourth (14 cases, accounting for 11%). Leading with anti-dumping investigations (77 cases, accounting for 60%); followed by self-defense cases (23, accounting for 18%); The third is anti-dumping cases (17 cases, 13%) and anti-subsidy cases (11 cases, 9%).

Speaking to the reporter of the Customs Newspaper, deputy head of Chu Thang Trung Department of Trade Remedies said: Goods are subject to investigation by applying the measures of Trade Remedies extremely diversely, ranging from agricultural and aquatic products to industrial products. Previously, only items with large export turnover, such as seafood, leather shoes have been sued, but now even items with small turnover also face lawsuits. It can be said that any export goods are likely to be the subject of investigation for applying Commercial Safeguards.

In response to the question, what are the key reasons that Vietnam’s export commodities are facing up to more and more trade remedies? According to Mr Trung: The process of liberalizing the global trade is becoming more and more widespread, the traditional trade barriers such as tariffs have gradually been removed, the commitments of market access have been accelerated along with the rise of bilateral and multilateral free trade agreements. This is considered one of the main causes for trade remedies being increasingly used as a legitimate tool to protect domestic production. In addition, the cyclical nature of economies also affects the rise of trade remedies. Legal experts on international trade have pointed out that the number of trade remedies cases occurred more during the recession and the economic crisis. At the same time, declining domestic industries tend to resort to trade remedies to protect their interests.

Mr Trung also points out that global production value chains are increasingly expanding and linking many countries together. As a result, trade remedies lawsuits have generated new trends, such as bales (simultaneous balances), tax evasion lawsuits (a state lawsuit against a possible evasion of a tax measure that other countries also sued for), lawsuit (a country can sue and other countries follow suit), dual lawsuits (anti-dumping and anti-subsidy lawsuits) that increase the number of trade remedies cases.

Regarding this issue, Ms Nguyen Thi Thuy Dung, head of the trade defense unit at the WTO Center, Vietnam Chamber of Commerce and Industry (VCCI) said: In fact, most trade remedies cases which Vietnam exports face, are coming from the fact that producers in the importing market feel threatened in competition with imported goods from abroad. Thus, the greater the competitiveness of exports, the more the risk of suing. No country can completely eliminate the risk of being sued for export goods.

Lack of experience in dealing with problems

Among the trade remedies cases, it is easy to see that the protest of some commodities and businesses is not effective. Many experts said that the results of the protest work depends on both subjective and objective reasons. At present, the protectionist movement and unilateralism continue to go hand in hand with the process of trade liberalization, so it is not simple to successfully protest, as this requires close coordination between enterprises, association and government.

According to Mr Trung, it can be seen that the work of appealing in some industries and domestic enterprises, is not effective because of a lack of experience in dealing with trade defense cases against foreign competitors. This situation is due to many reasons such as: The level of understanding of the majority of Vietnamese enterprises on trade remedies is limited, with no experience of appealing, no reasonable investment plan on resistance as well as no strategy, clear direction, determination and professional ability for appealing. In addition, the financial capacity of Vietnamese businesses is weak, while the cost of appealing is very high. To succeed, it may be necessary to hire experienced investigative lawyers. In addition, many enterprises have not met the requirements of the investigating agencies in providing documents, data, systems for keeping documents, contracts, data, incomplete invoices, science and system. Some businesses also avoid, do not participate or participate fully in the work of appeals while participation in the entire process of resolving the issue is a critical role to have chances of success for businesses.

How to “live with the flood”?

In the trend of Vietnam’s increasing economic integrating into the world economy, exporters should face trade remedies such as “living with the flood”. What the most important thing is that businesses will have to minimize risk with a litigated trade defense for increasing the likelihood of success when you get sued.

Regarding this issue, many experts point out that, first, businesses should protect themselves by equipping themselves with the basic knowledge of trade defense law. In addition, businesses should regularly exchange information with associations and state management agencies to receive early warning information on the possibility of being sued in the export market. Based on that, they can regulate business activities to avoid being sued. In addition, in order to facilitate their participation in trade remedy cases, Vietnamese businesses need to strengthen their relations with foreign partners because it is also a beneficiary of the trade defense investigation. The voices opposed to investigations by importers will also influence the decision making of foreign investigators. Importers are also aware of the information of the importing country and can promptly report on the dynamics of the importing country’s investigations to Vietnamese enterprises.

Mr. Trung noted that when a case is initiated, the appropriate steps of exporting enterprises should actively participate in the work of appeal by fully cooperating with the investigation agency to avoid them using disadvantageous available data to calculate dumping margin, subsidy. Normally, the tax rate calculated on this available data is very high, which can lead to the company being completely put out of competition and forced to withdraw from the market.

By Thanh Nguyen/Quynh Lan

 

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