Vietnam’s timber industry facing many risks of trade defense

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Plywood exports have increased significantly in recent years. Photo: Nguyen Thanh

Mr. Ngo Sy Hoai, Vice President and General Secretary of the Vietnam Timber and Forest Products Association,said that the US Department of Commerce (DOC) issued a final decision to investigate the plywood industry in Vietnam on June 9.

This decision was made based on allegations from the Fair Trade Union for Hard Plywood of the United States that some companies exporting plywood from Vietnam into US violated the anti-tax evasion law based on the framework of the United States Tax Law in 1930.

Notably, the United States is not the only country investigating Vietnam's plywood products. Earlier, on December 3, 2019, the Korean Trade Commission (KTC) also issued a decision on anti-dumping investigations of Vietnam's plywood exports.

As of April 24, 2020, KTC announced the results of the preliminary investigation, appliedtemporary tax rate to all plywood products from Vietnam exported to Korea will be at 9.18 - 10.56% (except sixinvestigated companies have higher taxes). The temporary tax rate is applied from May 29 to September 28, 2020.

In 2015, the Turkish Ministry of Economy also formally investigated Vietnam's plywood products and issued a final investigation decision on October 28, 2016.

Accordingly, a tariff of US$240 / m3 is applied to all companies that didn’t respond to investigating officers. The Turkish government applies a 0% tax rate to only two companies having responded.

Mr. Do Xuan Lap, Chairman of the Vietnam Association of Wood and Forest Products, said the risk in lawsuits related to anti-dumping on wood products exported from Vietnam has increased, especially in the context of Vietnam's timber industry seeingdeeper integration with the world market.

“Notably, the US-China trade war increases these risks. In the future, Vietnamese wood enterprises will continue to face risks, not only plywood but also some other items in other export markets,” he said.

Why is Vietnam's plywood facing many trade defense cases? Experts said it increased in volume and value of exports to Korean and American markets along with new FDI projects into plywood products, of which, there are FDI projects from China, causing anti-tax and anti-dumping lawsuits.

Mr. Do Xuan Lap said that in the current situation, the authorities need strengthened inspection and supervision of importers and domestic production business, the conversion of investment to Vietnam business can avoid risks in the near future.

The enterprises of boards and wooden furniture needs to restructure their production and administration, apply new technological and management solutions to increase both output and product quality to reduce costs.

Mr. Le Xuan Quan, Chairman of the Nano Furniture and Architecture Company expressed his opinion that local wood associations must review export activities of member enterprises to detect any irregularities between export production and volume. If detecting fraud, transmission of goods from China are detected, they must be widely disclosed, requesting competent authorities to strictly handle them.

Just a few illegal businesses helping Chinese enterprises to benefit can make the whole wood processing and export industry of Vietnam pay a high price.