What should businesses do to respond to trade defense lawsuits?

The trend of investigation is increasingly expanding.

According to the Department of Trade Defense, Ministry of Industry and Trade , the number of trade defense lawsuits against Vietnam's export goods has increased sharply in recent times, accounting for 65% of the total number of cases in the past 20 years. Up to now, Vietnam's export goods have faced 239 cases related to trade defense lawsuits.

The products subject to trade defense investigations are increasingly diverse. Notably, as an industry with high export turnover, Vietnam's agricultural and aquatic products bring in an export turnover of 10-12 billion USD each year; products such as shrimp, tra fish, basa fish, and Vietnamese honey are always facing investigations, warnings of investigations, lawsuits, and imposition of anti-subsidy taxes, etc.

Businesses need to be proactive to effectively respond to trade defense lawsuits. Photo: VNA

In 2021, for the first time, Vietnamese honey was subject to an anti-dumping investigation by the United States, although this product was investigated in 2021 and the US Department of Commerce (DOC) concluded at the end of 2021 and by mid-2022 the US Department of Commerce (DOC) officially imposed taxes on honey, with a preliminary tax rate of 400%, the final conclusion was reduced to 60%.

In addition to honey, pangasius, basa and shrimp were the first products to be investigated for anti-dumping by the United States, so every year since then, Vietnamese pangasius and basa have been requested by the United States to be reviewed for anti-dumping investigation. For shrimp, Vietnamese enterprises have to undergo 18 major reviews, and for pangasius and basa, 19 reviews.

Ms. Nguyen Hang Nga - Deputy Head of the Trade Defense Handling Department, Trade Defense Department - said that previous trade defense cases mainly focused on anti-dumping and anti-subsidy, but recently, anti-tax evasion investigations of trade defense have increased. Of which, the United States is currently the country with the most anti-tax evasion investigations against Vietnam.

In addition, the trend of trade defense investigations against Vietnamese export goods is increasingly expanding. While in the past it was mainly the United States and the EU, recently, developing countries, as well as countries with FTAs with Vietnam, have also increased their trade defense investigations more and more.

In particular, according to Ms. Nguyen Hang Nga, in 2020, the United States for the first time included the issue of currency undervaluation in the tax subsidy investigation program, which increased the burden on Vietnamese businesses. On the other hand, the trend of trade defense investigations is also more stringent, the investigation procedures are rarely extended, and the applied trade defense tax margin is also very high if businesses do not actively cooperate during the investigation process.

Early response preparation is needed.

In the context of trade defense investigations being a common form, and increasingly expanding in terms of markets and industries, the risk of facing trade defense lawsuits is inevitable for Vietnam's export goods in the coming time.

Faced with the risk of being sued for trade defense, Lawyer Dinh Anh Tuyet, Arbitrator of the Vietnam International Arbitration Center (VIAC), IDVN Law Office, said that businesses need to regularly update information on trade defense investigations through Vietnamese trade agencies in the countries we export to. Next is information from the Department of Trade Defense, Ministry of Industry and Trade, which is the focal point for all lawsuits. Along with that, the Law Office organizes training courses and regularly updates important information on market developments for businesses.

“On the other hand, although each different market will have a different investigation method, the common point that they all aim for in those lawsuits is the raw material and sales production area of the enterprise. This is something that enterprises need to pay attention to, as well as prepare from the beginning to have a suitable and effective response method" - Lawyer Dinh Anh Tuyet emphasized.

In addition, according to Lawyer Dinh Anh Tuyet, industry associations play a very important role in gathering businesses to respond to trade defense lawsuits in the market. With the participation of industry associations, even organizations such as VCCI, we will have a common voice of businesses. In particular, we will have timely recommendations to the Government and partner agencies to conduct investigations in a moderate manner and in accordance with international regulations, such as WTO regulations.

In addition, Lawyer Dinh Anh Tuyet said that one of the most important preparations of Vietnam is to perfect the accounting system and production data. Because the time for commercial investigation is very short, the Investigation Agency is increasingly tightening the extension of the investigation, because they consider Vietnamese enterprises to have experience. Therefore, if there is a request for an extension of the investigation, it will only be extended for 1-2 weeks. Thus, if enterprises have a system of traceability records and documents, that is very useful.

In order to support businesses in responding to trade defense investigations, Ms. Nguyen Hang Nga said that the Trade Defense Department has issued an early warning list of goods at risk of being investigated for trade defense, announced to businesses, associations, and relevant localities, ministries and branches to coordinate with businesses and monitor. “When receiving these lists, businesses should first check to see if the list includes the goods they have exported or not? Are the markets they are exporting to the ones that are frequently investigated? ” Ms. Nga emphasized.

In addition, according to the representative of the Trade Defense Department, businesses can listen to information from many sources, from their own importers. At the same time, it is necessary to update information related to lawsuits from law offices or from trade defense agencies from the Association... This preparation will help businesses have more time to prepare, better in terms of resources and knowledge of the legal regulations of the host country.

In particular, Ms. Nguyen Hang Nga recommends that businesses need to pay attention and listen to developments in issues related to trade defense lawsuits in order to coordinate and receive active support from the Department of Trade Defense. In addition, the association needs to appoint a contact point to regularly contact the trade defense management agency; establish a continuous information exchange channel to avoid missing any information about foreign trade defense lawsuits against Vietnamese export goods.

Thus, with early and remote preparation, businesses and industries will be able to proactively respond to trade defense lawsuits effectively; especially avoiding damages, as well as serious impacts on export activities.

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