Protecting domestic production to support sustainable exports

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Businesses and industry associations propose it should have policies to protect domestic manufacturing industries. Illustration: Ha Phuong

Danger from imported goods

Speaking at a conference to remove difficulties for production and support exports recently held by the Ministry of Industry and Trade, Mr. Nguyen Van Thuan, Chairman of the Rubber Association said, according to the signed free trade agreements. As a result, natural rubber imported into Vietnam enjoys a tax rate of 0%, which will encourage businesses to prioritize choosing import sources from Thailand, Malaysia, and Indonesia. The source of natural rubber imported from Cambodia and Laos has increased rapidly in recent years, contributing to competitive pressure on domestic rubber sources. The rubber product processing industry also faces difficulties in competing with imported products that are not controlled in price. "There is a lack of technical barriers in trade to prevent poor quality goods from being imported from other countries, causing damage to consumers and unfair competition with domestic goods," Mr. Thuan said.

Mr. Nguyen Minh Ke, Chairman of Vietnam Aluminum Profile Association, also said that the aluminum industry is facing the phenomenon of excess capacity, the output of factories in recent years has only reached about 60% of design capacity.

Meanwhile, in the last two years, foreign investors mainly from China are looking for transfer projects or new investment projects to produce aluminum profiles for domestic and export markets to evade the anti-dumping tax of Vietnam and trade remedy tax of many countries is applied to Chinese aluminum.

“If Chinese enterprises invest in aluminum production plants in Vietnam, it will aggravate the excess capacity of the aluminum industry, pushing Vietnamese aluminum producers to face the risk of losing the domestic market for the second time. In the long run, it will cause Vietnamese aluminum products to be threatened with anti-circumvention tariffs from major markets that are imposing Chinese aluminum tariffs such as the US, Canada, and Europe," Mr. Ke said.

Besides, there is the phenomenon of some units illegally importing raw materials, evading VAT in large quantities to reduce the selling price to compete with manufacturers, causing disruption to the domestic market.

Similarly, the cashew industry is facing difficulties due to the increasing situation of cashew kernels imported from Africa, threatening the domestic cashew production and processing industry.

African countries, which used to be partners to supply raw cashew to Vietnam, are now gradually becoming competitors to Vietnam's cashew kernels. These countries strictly regulate and monitor the export price of raw cashew nuts, and impose high export taxes, while exempting the export tax for cashew kernels. In Vietnam, both raw cashew nuts and imported kernels are exempt from tax.

Policies to protect domestic production

Facing increasing threats from imported goods, businesses and industry associations have all proposed policies to protect domestic manufacturing industries.

Mr. Nguyen Minh Ke said that in the third quarter of 2023, there will be a final review of the anti-dumping duty on Chinese aluminum. Accordingly, the Vietnam Aluminum Profile Association proposed the Ministry of Industry and Trade maintain the anti-dumping tax policy on some aluminum products of Chinese origin to protect the legitimate interests of domestic manufacturers, in accordance with international law, and ensure the highest effectiveness of the application of trade remedies for domestic goods.

Along with that, it is necessary to pay attention to the shift of investment capital in the aluminum industry from China to Vietnam, carefully consider and have solutions to purify to limit the investment capital of aluminum profile production projects with foreign investment into Vietnam. In which, it is necessary to consider the impact of the projects on the domestic aluminum industry.

Mr. Nguyen Van Thuan proposed the Ministry of Science and Technology and the General Department of Standards and Quality build technical barriers for imported rubber products such as tires and rubber gloves to prevent poor quality imported products from other countries, causing damage to consumers and unfair competition with domestic goods.

As for the issue of cashew kernels imported from Africa, Mr. Bach Khanh Nhut, Vice Chairman of the Vietnam Cashew Association (VINACAS) suggested that the Government should soon negotiate and sign bilateral agreements with African countries on duty-free import and export of each other's goods, including the fact that African countries are exempt from tax on raw cashews exported to Vietnam. In case of failure to negotiate, Mr. Nhut suggested that the Government, ministries and branches apply the principle of "reciprocity" in international relations so as not to exempt import tax on cashew kernels imported into Vietnam. tax rate of 25% for shelled cashew nuts (code 0801.32.00); and at the same time impose the minimum import price for cashew kernels imported into Vietnam. Currently, India is also applying this policy to imported cashew kernels.

Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) stated that the trend of the markets is increasingly towards sustainability.

Consumers are increasingly interested in transparency, traceability, sustainability, social responsibility, and environmental responsibility of the product production chain, thus it requires the unremitting efforts of the business community.

However, according to Mr. Nam, in addition to the competition of countries with the same strategic seafood export, in many key markets of Vietnam, there is a situation of "negative news".

The regulations erected without a scientific basis or more stringent than necessary, protectionist measures initiated within the framework of “no WTO violations” such as anti-dumping investigations when Vietnam's exports increase market share. Besides, there are signs of unfair and discriminatory enforcement of goods from Vietnam by some partner countries within the signed FTA framework. For example, Korean enterprises have to buy quotas to import shrimp from Vietnam.

“The above ways and developments have taken place, requiring businesses, industries and ministries and sectors to effectively coordinate in international struggles and protect Vietnam's interests. Specifically, the Ministry of Industry and Trade and other ministries, branches and associations need to work closely to identify, proactively and effectively fight in the international arena with signs or developments that cause difficulties for key export products," Mr. Nam said.