Against fraud of origin: Control the production capacity of businesses

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Director of the Customs Control and Supervision Department Au Anh Tuan

The Director of the Department of Customs Management Supervision (General Department of Customs) Au Anh Tuan said that synchronous implementation requires close cooperation between relevant agencies. At the same time, policies and laws need to be completed to have sufficient grounds for implementation.

With the responsibility of state management in the field of customs, how has the customs authority taken measures to promptly detect and prevent origin fraud?

Carrying out the assigned tasks, especially the instructions of the Prime Minister and the Ministry of Finance, the Customs authorities have actively, synchronously and drastically taken measures to strengthen control and prevention oforigin fraud and illegal transportation of goods.

In particular, the General Department of Customs has directed local customs departments to strengthen inspection and supervision when carrying out import and export procedures, especially to enhance the collection of information such as production capacity, machine lines, equipment, capacity of the factory, the number of employees and the responsibility of the agency in case of identifying high-risk subjects.

Customs officers must check production establishments to determine whether enterprises actually process and export production processing.

In Decree 31/2018 / ND-CP, there is a simple process of processing without using specialized skills and machinery to create products. Specifically, Article 9 of Decree 31/2018 / ND-CP stipulates that simple assembly into a finished product is not considered when determining the origin of goods.

However, the current regulations are still general and determine how simple they are, which are not yet specific in legal documents, leading to difficulties of the Customs authorities in the inspection of specialized production lines and capacity. Production to determine whether the enterprise carries out such a production process is simple or complex. On that basis, the Customs authorities can assess that the goods produced meet the rules of origin in accordance with the Government's Decree No. 31/2018 / ND-CP as well as other guiding documents for implementation of free trade agreements.

Actually determining the capacity of enterprises to combat fraud of origin still faces some difficulties. In your opinion, how is the coordination between Customs and other industries to improve the legal system to have enough facilities to handle this issue?

To combat origin fraud, in recent years, the General Department of Customs has directed the Customs Departments of provinces and cities to intensify inspection of production facilities. Through inspection, the Customs authorities have detected a number of cases inwhich foreign-invested enterprises abuse the establishment of factories in Vietnam to perform some stages, or do not carry out processing activities, but then export goods recorded as "made in Vietnam” for exporting tothirdcountries.

Through inspection and monitoring of some factories show that they only perform the change of packaging and labeling, not processing, or check that enterprises only perform some simple processing steps. However, in order to do this, it is necessary to have close cooperation between the Customs authorities and the concerned agencies. For example, coordinate with the provincial and municipal Customs Department with the insurer to determine whether enterprises pay social insurance or not, and then coordinate with the suppliers of goods such as electricity, water and input materials to determine whether businesses use themto produce products or not. Customs authorities will proactively inspect production facilities in order to promptly identify abnormalities in production activities, thereby assessing the compliance with the law on origin.

However, as mentioned above, Decree 31/2018 / ND-CP, Circular 05/2018 / TT-BCT has not yet provided specific guidance on simple processing and only general provisions: installation, assembling and processing parts to form a complete product is called simple machining. However, the production process varies from industry to industry, so the Customs Department recommends ministries, especially the Ministry of Industry and Trade, to amend legal documents on the origin of goods, especially exported goods must specify what is simple machining. Thereby, the new management agency has a measure and basis to consider and recommend businesses to perform deep processing steps to create added value as well as meeting the rules of origin in order to be recognized as‘made in Vietnam’. At the same time, it is the basis for handling acts of abusing Vietnam to carry out simple processing for export, avoiding affecting genuine businesses doing real outsourcing activities to create basic values ​​of goods.