Trade Defence Lawsuit: Collective Game

Ms Nguyen Thi Thu Trang, Director of the WTO and Integration Centre under the Vietnam Chamber of Commerce and Industry (VCCI), said, while Vietnam’s exported goods have so far faced hundreds of trade defence proceedings in foreign markets, Vietnam has used this tool only four times, with three safeguard cases and one anti-dumping case.

 

She said since the first free trade agreement (FTA) was signed in 1996 (CEPT/AFTA), Vietnam has signed 10 FTAs with 22 partners, including one within ASEAN, six with ASEAN and its partners, three bilateral FTAs (with Japan, Chile and South Korea), and one multilateral FTA (with the Eurasian Economic Union). Eight FTAs have gone into effect (two FTAs were signed in 2015, including an FTA with the Eurasian Economic Union, yet to go into force).

 

"The nature of FTAs is the elimination of tariff barriers. According to its commitments to the World Trade Organisation (WTO), Vietnam pledged to cut a third of tax lines but it was committed to eliminating 80-90 percent of tariff lines. And, unfair competition on the commodity market is obvious,” Ms Trang said.

 

Thus, commodities from FTA signatories with Vietnam confront no barriers when they enter the Vietnamese market. In theory, the risk of unfair competition is associated with international trade in goods.

 

In fact, for Vietnam, this risk may be even higher as its FTA partners are importing a lot of commodities from Vietnam which are more exposed to trade defence lawsuits. Its imports from FTA partners are susceptible to trade defence cases.

 

 Under the poll conducted by the WTO and Integration Centre under VCCI, 60 - 70 percent of 1,000 businesses surveyed said they have learned of such trade defence instruments. However, they only know but not understand such instruments.

 

The survey did not show any statistics about the existence of the risk of unfair competition of foreign imported goods in Vietnam but they sensed the existence of such risk in the Vietnamese market. Accordingly, nearly 70 percent of respondents raised concern that some foreign products are sold on the Vietnamese markets at prices lower than in their homelands, which is illegal because they are subsidised by foreign governments in various forms or they deliberately sell at low prices to gain the market from the beginning.

 

Only a few of them thought that low prices of foreign imports are resulted from low production costs, tax cut or exemption.

Ms Trang said trade defence lawsuit is not an "individual game" but a "collective game", or other words it is a strategy or an action of the entire industry. To use this tool, companies must unite to form a force strong enough to represent the domestic industry of relevant products.

 

Besides, companies need to collect evidence of dumping and subsidy as well as the evidence of their damage and to hire counsels for the case. These are essential requirements for all plaintiffs in trade safeguard proceedings. As these works require high costs, if businesses do not prepare enough resources, the effect of trade defence tools will be very limited.

 

Also according to the survey, 86 percent of polled businesses are concerned about financial difficulties if they take legal action (52 percent think it is quite difficult and 34 percent think extremely difficult). Only 2 percent think lawsuit expenses for trade defence suits are affordable. 12 percent consider going to court if necessary despite the high legal costs.

 

She said Vietnamese businesses seem not to have any material preparations for the use of trade defence instruments when necessary. A small group said legal expenses are not difficult to mobilise, perhaps because they have abundant available funds rather than spare a sum for this issue.

 

Personnel to follow up the case also need to be taken into account. Only 11 percent of respondents said that they have qualified staffs for this job. 48 percent said that their staffs can do this but it is difficult. And, 41 percent said they cannot have personnel for this.

 

Therefore, according to many experts, it is necessary to propose appropriate solutions to lodge trade defence cases in Vietnam in the coming time. These proposals should come from inadequacies in practice and aim at two targets: The capacity of businesses wishing to use trade defence instruments and the State mechanism that enables businesses to do this.

 

Using or not using trade defence instruments depends almost entirely on suing companies and business associations. Thus, according to the WTO and Integration Centre, supporting these entities are the most important. Particularly, businesses must have deep knowledge of trade defence instruments.

 

For its part, VCCI should strengthen consultation and orientation for businesses and enhance connectivity of and guidance for businesses.

 

State agencies necessarily publish information, and support searching and collection of official data controlled by State agencies. They can also assist businesses by simplifying and reforming administrative procedures relating to trade remedies, effectively and timely coordinate with relevant bodies to provide information for investigation. And, most importantly, the State should improve the legal basis for trade defence instruments.