Early warnings reduce risks in trade defense

VCN - In the first months of 2024, export turnover of goods grew strongly, continuing the recovery momentum from the end of 2023. Along with that, the risk of trade defense investigations also escalated
Turn Turn "risk" into "opportunity" before trade defense barriers
Proactive in trade defense to maintain export advantages Proactive in trade defense to maintain export advantages
Many export product groups are at risk of being investigated and subject to trade defense measures Many export product groups are at risk of being investigated and subject to trade defense measures
Early warnings reduce risks in trade defense
The Trade Remedies Authority (Ministry of Industry and Trade) supports businesses to proactively respond, give an early warning list of some export products at risk of trade defense investigation. Illustration photo: ST

Advance warning information

After announcing the initiation of a global safeguard investigation on man-made staple fiber products made from polyester, the United States International Trade Commission (USITC) recently issued a questionnaire for a global safeguard investigation on artificial staple fibers from polyester. Faced with this information, the Trade Remedies Department (Ministry of Industry and Trade) immediately provided specific information to Vietnamese manufacturers and exporters interested in the case to promptly grasp the incident.

To support businesses to be more proactive in handling and responding to foreign trade defense investigations, in 2020, the Prime Minister issued Decision No. 316/QD-TTg approving Project on Building and Effectively Operating the Early Warning System on Trade Remedies. The goal of the project is to warn in advance of export products subject to trade defense investigation risks and to implement more focus and straight-point supporting plans.

USITC issued a questionnaire to manufacturers and exporters of polyester-based man-made staple fiber products into the United States to determine whether the import of the investigated product causes serious injury to the US domestic industry or not. The deadline for interested parties to respond to the questionnaire is April 17, 2024.

The case was initiated by the USITC on February 28, 2024 following a request from US polyester man-made staple fiber manufacturers, including Fiber Industries LLC d/b/a Darling Fibers; Nan Ya Plastics Corp, America and Sun Fiber LLC. The plaintiff alleged that the import of man-made staple fibers from polyester has increased sharply compared to domestic production and consumption, causing serious damage and affecting the domestic production industry.

According to USITC data, in the period 2021-2023, the export turnover of investigated products from Vietnam to the United States was approximately 5.9 million USD (in 2023 alone it is 5.2 million USD, ranking 8th in number of countries exporting to the United States and accounting for 3% of the total import market share into the United States). USITC is expected to issue a conclusion on damage on July 9, 2024 and will report to the President for consideration and decision on August 26, 2024.

Previously, in 2017, this product was subject to an anti-dumping investigation by the United States with Korea, India, China, Taiwan (China) and Vietnam; anti-subsidy investigation with China and India; but then Vietnam was excluded from the scope of investigation at the request of the plaintiff. Currently, products from the above countries and territories (except Vietnam) are still subject to anti-dumping and anti-subsidy taxes.

Facing the increasing protectionist trend, Vietnamese goods are increasingly facing trade defense investigations from abroad. In addition, previous trade defense cases mainly focused on anti-dumping and anti-subsidy protection, but recently, investigations against trade defense tax evasion have become more and more common. The trend of trade defense investigations on Vietnamese export goods is increasingly expanding to developing countries as well as countries that have free trade agreements (FTA) with Vietnam.

To support businesses to proactively respond, the early warning list of some export products at risk of trade defense investigation, anti-circumvention of trade defense measures and origin fraud has been updated. Recently, the Trade Defense Agency issued an early warning of the risk of Canada investigating and applying trade defense measures on screws imported from Vietnam. The Canadian Customs Authority (CBSA) will extend the re-investigation to update the normal values and export prices for certain carbon screw products originating or exported from China and Taiwan (China). The Trade Remedies Department said that although goods originating in Vietnam are not under investigation, there is some evidence that export transactions exist between Vietnamese exporters and importers in Canada. Therefore, it cannot be ruled out that Canada may conduct investigations to expand the product scope/investigate against trade defense tax evasion or initiate new trade defense cases with similar products of Vietnam.

Therefore, to promptly respond to trade defense cases that may occur in the future, relevant associations and businesses need to review the export of carbon screws to the Canadian market (refer to the codes HS following: 7318.11, 7318.12, 7318.14, and 7318.15), prepare to respond in case Canada conducts a trade defense investigation; proactively research and master Canada's trade defense investigation regulations and procedures.

In addition, many groups of goods such as wood, iron and steel, construction materials, manufactured industrial products to the US, EU... are at risk of being investigated, appllied trade defense measures and evading measures. Trade remedy measures are also provided with early warning information.

Timely adjust business strategy

Through early warnings, businesses have been provided with information, fully aware of the principles and investigation processes; necessary tasks to deal with and possible scenarios. Thanks to that, businesses have time to prepare and to fully and accurately meet the requirements of foreign investigation agencies.

According to Ms. Nguyen Thu Trang, Director of the Center for WTO and Integration, Vietnam Confederation of Commerce and Industry (VCCI), in all countries, a trade remedy lawsuit is a legal process whose fighting is very complicated in terms of technique. Through monitoring, most cases of ineffective lawsuits stem from passivity, too short preparation time, and surprises in responding to lawsuits.

Also according to Ms. Nguyen Thu Trang, early warnings enable businesses to predict early risks and prepare necessary tools initially. Therefore, businesses can actively minimize loses. The ability to prevent is difficult, but if there are appropriate adjustments to avoid risks such as: expanding the market, diversifying the market, reducing the heat and pressure of too strongly increasing the export of goods to one market …. Early warnings also help minimize the risk of trade defense cases if there are timely and appropriate adjustments in production and export strategies.

Ngọc Linh/ Thu Phuong

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