The fight against fraud of origin and the issues raised - Final part: Still many problems related to the origin, labelling of export goods

Au Anh Tuan, Director of Customs Management Supervision Department (General Department of Customs)

In addition to the stories of foreign goods "disguised" Made in Vietnam, have been discovered recently. What difficulties and inadequacies related to the origin of goods for export goods does the customs office face?

In addition to cases of violations that have been detected and handled, through management policies related to the field of origin, goods labelling, the General Department of Customs has detected inadequacies related to stating origin on goods/goods packaging and declaration of origin on export customs declaration, in case exports do not meet rules of origin of Vietnam as prescribed in Circular 05/2018 / TT-BCT of Ministry of Industry and Trade.

The determination of rules of origin for export goods, especially goods exported to be made in Vietnam (Made in Vietnam), must meet rules of origin in accordance with the provisions of the Decree. No. 31/2018 / ND-CP dated March 8, 2018 of the Government and Circular No. 05/2018 / TT-BCT dated April 3, 2018 of the Ministry of Industry and Trade. The value added content on the product (LVC) must reachmore than30% or change the code of goods according to the level of twonumbers, fournumbers or sixnumbers compared to the HS codes of starting materials into no origin. Therefore, it is necessary to work based on specific production, processing and processing activities at the enterprise.

For example,enterprises import chicken feet from Brazil, Japan andKorea on processing, export production; the production stages include: cleaning, thin cutting, marinating, packaging (vacuuming), and then exporting. Or businesses importing salmon, whole saba fish originating from Norway, Chile andDenmark and producing products such as salmon, sliced basa and export to markets such as: Japan andTaiwan. In other cases, enterprises import semi-finished products (for example, cut-out shirts), and then make garments for export.

In the view of the General Department of Customs, the cases mentioned above are simple processing according to Clause 6, Article 9 of Decree 31/2018 / ND-CP. When exporting, enterprises cannot declare goods of Vietnamese origin.

Fake Chinese goods originated from Vietnam were seized by HCM City Customs in November 2019 at Cat Lai port. Photo: T.H

However, through review, the Customs authorities realisedthat there is no legal document specifying the content of origin on the packaging/export goods as well as showing information on the origin of goods. What do you think of this?

With the recording of the origin of goods as semi-finished products at the request of foreign processing partners, in fact, Vietnamese enterprises have signed contracts to add or produce and export shoes with partners likemother companies in Japan. Under the request of partners, Vietnamese enterprises process and manufacture shoes and print "Made in Japan" on products exported to Japan to continue producing shoes.

However, the printing of the words "Made in Japan" does not have specific instructions in the legal document. In this case, if the goods meet rules of origin as prescribed, the enterprise will declare as Vietnamese origin on the export declaration

From the above obstacles and inadequacies, the General Department of Customs sent a proposal to the Ministry of Industry and Trade and the Ministry of Science and Technology for guidance atthe end of 2019. Currently, the Ministry of Industry and Trade has received and presided over the drafting of documents to collect comments from concerned ministries and branches for guidance on this content.

While ministries do not have specific instructions, so in the above cases, how does the General Department of Customs provide guidance to provincial, municipal and enterprise customs departments?

The contents of labelling and origin belong to the functions and tasks of the Ministry of Industry and Trade and the Ministry of Science and Technology. While ministries have not yet issued documents to guide the way of writing the origin, labelling on exported goods/packaging, leading to both difficulties of customs authorities and enterprises in real process. Currently, investigating, verifying and clarifying cases that show signs of violation of origin and goods labelling. On the other hand, the US-China trade war has a great impact on Vietnam's economy. It is forecast that goods from countries subject to high tax rates will likely find ways to illegally transfer into Vietnam, falsify Vietnamese origin and then export to big markets to evade defencesofcommerce. These behaviours leads to the risk of Vietnam’s exports being investigated by countries, imposing anti-dumping duties, safeguard duties andsubsidy taxes, damaging Vietnamese manufacturers and discrediting them in the international market or being restricted in export to these markets.

Although there is no authority to promulgate specific instructions to write country of origin or label on goods/goods packages, through professional inspection and guidance at some local customs departments, The General Department of Customs recommends units to collect, analyse information, conduct investigations, verify and make clear cases of signs of suspicion of fraud, counterfeiting of origin or conveying legal goods. If the export goods do not meet the rules of origin, they shall handle them according to regulations. In other cases, it is recommended that enterprises not write Made in Vietnam on goods/goods packages if the goods do not meet rules of origin as prescribed but should only write the phrase "Assembled in Vietnam"; "Completed in Vietnam" or "Assembled by Company/Group Name" or "Processed by Company/Group" or "Products of the Company/Group.

As you mentioned, the Ministry of Industry and Trade is writing a guiding document for determining the origin of exports, does the General Department of Customs have any comments related to this issue?

At present, the Department of Customs Management Supervision has submitted to leaders of the General Department of Customs and leaders of the Ministry of Finance the content of suggestions at the request of the Ministry of Industry and Trade. The proposal of ways of displaying origin and labelling on goods/goods packages shall be implemented as follows:

If the exported goods meet the criteria of origin of Vietnam as prescribed in the Government's Decree No. 31/2018 / ND-CP of March 8, 2018, detailing the Law on Foreign Trade Administration on goods origin and Circular No. 05/2018 / TT-BCT dated April 3, 2018 of the Ministry of Industry and Trade stipulating goods origin or predetermining origin of goods that meet Vietnam's rules of origin, on goods, export goods packaging with the words "Origin: Vietnam"; "Made in Vietnam"; "Produced in Vietnam" or"Product of Vietnam".

If the exported goods do not meet criteria of Vietnamese origin as prescribed in Decree No. 31/2018 / ND-CP and Circular No. 05/2018 / TT-BCT or pre-determined origin does not meet regulations of origin rules of Vietnam on goods and packages, the above-mentioned phrases "Origin Vietnam" must not be written; "Made in Vietnam"; "Produced in Vietnam"; "Products of Vietnam". In this case, the trader must write phrases such as "Assembled in Vietnam"; "Completed in Vietnam" or "Assembled by Company/Group " or "Processed by Company/Group" or "Products of the Company/Group.

In addition, the General Department of Customs also gave comments on how to declare the origin on the export customs declaration; origin criteria on customs declarations; the inspection, supervision and control of the determination of the origin of export goods and the coordination between related agencies to combat origin fraud.

We hope the Ministry of Industry and Trade and relevant ministries and agencies will soon issue specific guidelines on origin of goods so that their practical application will be convenient and effective to avoid foreign goods "disguising" Vietnamese goods, especially in the context that our country has been participating in many new generation FTAs with very strict rules on the origin of goods.