Economic Sector

Last updated: Thursday, April 18, 2019


Trade Remedies: Increasing Difficulty

Posted: Thursday, January 24, 2019

Vietnam has repeatedly dealt with the "boom" of trade defense lawsuits, while the financial capacity and the ability to cope with situation of some domestic goods and businesses are still weak.

Currently there are two conflicting trends in the world, on the one hand, many countries promote trade liberalization by promoting bilateral and multilateral FTAs ​​in the context of the Doha Round falls into a deadlock. On the other hand, others tend to strengthen trade protection measures, especially through trade defense tools to protect domestic production.

The recent liberalization of trade and the use of trade defense measures considered to be in conformity with the provisions of the World Trade Organization (WTO) to protect the domestic market is a highlight of the trade policy of many countries in the world in the current period.

All items are likely subject to trade defense
According to Mr. Chu Thang Trung, Deputy Director of the Department of Trade Protection (Ministry of Industry and Trade), trade defense tools that WTO and FTAs ​​allow to apply include three measures are anti-dumping, anti-subsidy and self-defense remedies.

WTO data show that between mid-October 2017 and mid-May 2018, WTO members initiated an investigation of 173 trade remedies measures; including 137 anti-dumping measures, 28 anti-subsidy measures and 8 safeguard measures. The number of trade remedies initiated by this investigation does not take into account the anti-evasive measures that account for more than 40% of the total trade-related measures and policies that WTO members have implemented during this period.

According to a report by the Ministry of Industry and Trade, as of October 15, 2018, there were 141 trade defense cases initiated by 18 countries and territories for Vietnamese exports. Of these, the United States is the country that initiated the most investigations (27 cases, accounting for about 20%); followed by Turkey (20 cases, 15%); India (17 cases, 12%) and the EU (14 cases, 11%).

The trend of trade defense lawsuits in the world for Vietnamese exports is mainly focused on lawsuits against tax evasion, domino lawsuits, double lawsuits (concurrently anti-dumping and subsidize lawsuits).
Typically, some cases have a negative impact on the production of domestic enterprises such as the US investigating to apply safeguard measures with solar batteries, cold rolled steel and wear-resistant carbon steel, shrimp and catfish; Australia investigated anti-dumping with steel wire; Canada investigated anti-dumping and countervailing duty on Vietnamese copper-fitting products.

In the past, only items with large export turnover such as seafood and footwear were sued, now even small-scale items face lawsuits. It can be said that any exported goods are likely to be subject to investigation using trade defense.

Active response
In recent years, Vietnam has built a quite complete legal framework to enforce trade defense law in accordance with WTO regulations. However, in fact, in general, Vietnamese enterprises have not fully grasped these regulations and used them appropriately to protect their legitimate rights and interests. Businesses seem to be passive, lack of information, even lack of human resources with experience in trade defense, leading to losses.

According to Ms. Nguyen Thi Thu Trang, Director of WTO Center and Integration, VCCI, most anti-dumping lawsuits often have very short term, technical requirements are very complicated, while Vietnamese enterprises are not always ready for overseas lawsuits.

Facing this fact, the Ministry of Industry and Trade has cooperated with relevant ministries and branches to regularly update enterprises and business associations on the trend of applying trade defense measures to help them master and develop an effective response plan and a reasonable business strategy in planning investment, production and market development.

Moreover, the Ministry has also upgraded the early warning system to assess export products at risk of being subject to trade defense measures, thereby helping enterprises to actively adjust their production and export plans and have timely response measures, limiting obstacles to anti-dumping lawsuits.

For businesses, according to experts, they need to actively explore the basic knowledge of trade defense laws, especially the legal provisions on trade defense of the markets that are and will be export; prepare resources to deal with the risk of trade defense lawsuits that may occur at any time.

Particularly for large markets like the United States, it is necessary to determine exactly which states and states they want to reach. On the other hand, businesses also need to create good relationships with partners to be alerted and aware of trade risks early. For enterprises exporting strong commodities such as agricultural products, forestry and aquatic products, it is necessary to strengthen food safety and hygiene measures, improve product quality to overcome quality and technical barriers. In particular, enterprises in the same industry need to link closely with each other to promote the overall strength in taking advantage of market opportunities as well as dealing with trade incidents.

Quynh Chi

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