Confronting International Trade Disputes: Corporate Initiatives Needed

Under the trends of trade liberalisation and international economic integration according to WTO requirements, all conventional non-tariff barriers like quotas, licences and technical barriers must be gradually diminished and finally ended, to facilitate global trade. These movements widen access for commodities made by developing countries to developed country markets, and vice versa. However, this will trigger increasingly severe competition among nations.

 First of all, many countries will abuse international trade equality measures. Importing countries may sue exporters, in order to impose higher taxes on imported commodities. Under WTO law on anti-dumping tax and the laws of several countries, in case the volume of a commodity imported from a country accounts for less than 3 per cent of the total import volume of that commodity into importing country, all petitions will be void. Therefore, if a country exports a quantity higher than that benchmark, the importing nation will have sufficient legal foundation for filing a lawsuit. In addition to this regulation, the importing nation can sue all countries exporting the same products; therefore, Vietnam can still be brought to court even though its export volume has not exceeded 3 per cent of the total importing volume of the suitor.

 

Until now, Vietnam has experienced several international trade disputes, especially antidumping cases. However, most Vietnamese business associations and companies don’t want to follow lawsuits and they don’t have measures to stand against antidumping cases.

Worse, in case of being confronted with international trade cases, many Vietnamese businesses showed pessimistic attitudes, fearing the cases would lead their business to the brink of bankruptcy and that the Vietnamese market would be submerged by foreign commodities and services with more competitive advantages.

 

Many even think that international trade cases only concern the export of sensitive commodities and products, and nothing will happen to franchising and outsourcing. Therefore, they show no worries although more and more foreign partners are arriving.

In general, Vietnamese companies are ready to pay 10 per cent or more of its revenues for trademark popularity, but nothing for legal matters.

 

As asked about the hesitation of many companies in preparing for antidumping cases, Ms Dinh Thi My Loan, Director of Competition Management Department under the Ministry of Trade, said: Sued Vietnamese companies normally do not take the initiative and they lack experience in dealing with such situations. Instead, those companies usually rely on State agencies to resolve the matter. Following this course, facing a failure at some point is unavoidable.

 

Another difficulty is that Vietnamese lawyers are incapable of filling their roles in antidumping cases. The reason for this is their lack of experience in international disputes. According to statistics from the Ministry of Justice, Vietnam has some 4,200 lawyers but 3,300 of them are working for arbitration centres or law courts. Only 50 lawyers in Vietnam have reached international level, or in other words, have sufficient experience to help Vietnamese companies in international trade dispute cases. The number of capable lawyers is too small for the hundreds of thousands of companies in Vietnam in need of legal assistances.

 

Successfully facing anti-dumping cases must be understood as the way to minimise damages and maintain export markets. Sued companies must be able to compare the price level causing the accusation, and the price the complainant is seeking to determine if they have competitive advantage over rivals. Knowing the result of the case before it is fully complete is impossible.

 

Before the Competition Law takes effect, many companies could give a pretext to avoid their responsibilities. But now, all such behaviour will be modified by the Competition Law. As a result, to survive, companies must rely on themselves, take the initiative in protecting their rights and interests, and avoid violations of law, Ms Loan warned.

 

To protect themselves, businesses must understand the basic regulations of the Competition Law and the instructive documents for the implementation of this law. They should end operations violating the competition law. For example, some advertisement activities were previously absolutely normal, but the Competition Law took effect and these activities can be understood as unhealthy competition.

 

According to the Competition Management Agency, Vietnam encountered 28 antidumping cases as of late 2006, and lost 23 of these cases. Especially in 2004-2005, antidumping cases against Vietnamese commodities peaked when the EU, Argentina, Egypt, Turkey and Peru all sued Vietnamese companies.

 

The Competition Management Agency said sued commodities of Vietnam are mainly key items such as fish, shrimp and footwear. And, companies of Vietnam, China, Thailand and India are normally brought to court at the same time.