Aggressively Preventing Fraudulent Vietnam Origin

2:22:23 PM | 10/1/2020

Vietnam Business Forum Magazine has an interview with Mr. Nguyen Tien Loc, Director of Post-Clearance Inspection Department under the General Department of Vietnam Customs, to find out about the current status of faked origins and solutions to this. Le Hien reports.

Why is counterfeited Vietnam origin increasingly sophisticated and complicated?

In the current trend of intensive integration into the world economy, Vietnam signed many free trade agreements (FTAs) with other countries around the world. Important trade agreements such as Vietnam – U.S. Bilateral Trade Agreement (BTA) and the EU - Vietnam Free Trade Agreement (EVFTA) have created huge competitive advantages for Vietnam to attract FDI flows from foreign countries, and posed many challenges to regulatory agencies like ensuring a favorable environment to attract foreign investment and promptly preventing frauds exploited by Vietnam’s open policies.

In recent years, in order to take advantage of preferential tariffs granted to Vietnam by FTA partners, foreign manufacturers used Vietnam origin to get such incentives for their exports. In the past, customs authorities mainly focused on checking and preventing frauds of origin of imported goods in customs clearance and post-clearance.

However, since mid-2018, the U.S.-China trade war burst out and the U.S. has imposed high tariffs on many goods originated from China. Customs authorities have focused on studying methods and risks of origin fraudulence - using Vietnam's origin for exports sold to the United States and the European Union (EU).

Which commodities are prone to Vietnam origin fraudulence when exported to the United States?

The scope of commodities is quite large. Our initial research first focused on unanticipated fast-growing exports, which rose by 15% or more. On October 8, 2019, we established a special taskforce to study and inspect suspicious frauds. I directly manage it.

After researching Vietnam’s regulations on origin and standard conditions to determine Vietnam origin for goods and studying import and export activities at some companies, we will focus on Vietnamese goods exported to the U.S. market and forecast risks back to mid-2018 when the U.S.-China trade war happened. The U.S. has imposed high tariffs on goods originated from China.

Information collection and analysis show that some companies have made a sharp rise in export value to the U.S. market and customs authorities have made preliminary statistics on 19 groups of goods prone to origin fraud, like electronics, electric cables, solar batteries and handicrafts, to make a list of businesses that may defraud or counterfeit origin for inspection. In the first phase, we will make a test to draw experience. In the second phase, this activity will be applied to post-clearance customs nationwide to prevent this kind of fraud.

How were violating companies handled in 2019?

We inspected nine companies and requested nine local customs departments to investigate in 24 other companies. Based on the list of 19 groups of likely commodities with sudden increase of export value to the U.S. and EU markets, we examined nine enterprises and detected origin frauds in four companies exporting to the U.S. (three assemblers of bicycles and electric bicycles, and one assembler of wood products). They admitted using Vietnam origins for their exported goods and we asked the General Department of Customs to handle these cases according to regulations. In remaining industries, we continued to consolidate and clarify signs of violations, expand and check some groups of products like solar batteries and LED lights.

In the second phase, we directed our subordinates nationwide to conduct inspection to promptly prevent companies from counterfeiting Vietnam origin for their exported goods; focus on high-risk areas and newly established enterprises (from late 2018) that imported components, materials and spare parts from China and exported products to the US and EU markets. We issued Document 36/KTSTQ-P5 to assign nine provincial and municipal customs agencies to inspect 24 suspicious enterprises. To date, they have issued 19 out of 24 post-clearance inspection decisions. We are urging and supporting them to complete inspections to make reports to the Ministry of Finance and the General Department of Customs.

Do you have any recommendations to current regulations to improve the fight against origin fraud and illegal transmission?

From our work, we think that there is a need to supplement regulations on trademark and Vietnam origin used for goods. Customs authorities have repeatedly proposed the Ministry of Industry and Trade complete rules of origin for Vietnamese goods, conduct early review and provide specific guidance on self-certified origin as per Article 25, Decree 31/2018/ND-CP. The Ministry of Industry and Trade needs to review, amend and supplement regulations on simple processing stages as per Article 9, Decree 31/2018/ND-CP to match the current situation. There is a need to review and amend Article 34 and Article 72 of the Law on Sanctions on Administrative Violations, Article 63 of Decree 185/2013/ND-CP and Clause 26 of Decree 124/2015/ND-CP amending Article 63 of Decree 185/2013/ND-CP on information rectification, to make consistent rulings.

Customs authorities are also studying and reviewing regulations to make necessary amendments and supplements to decrees on administrative sanctions in the customs field to ensure that sanctions are enough to deter companies from infringing rules of origin. At the same time, the General Department of Customs continues to strengthen measures to fight against origin fraud and illegal transport. It will gather statistics on fraudulent cases and signs of illegal transport cases relating to the U.S. market and will report on these matters by the end of the year.

In order to improve the fight against origin fraud and illegal transport, we believe that one urgent, necessary measure is to issue a certificate of origin (C/O) through the National Single-window Mechanism.

Thank you very much!