Maintain advantages for exporting goods thanks to early warning of trade defense

High efficiency from early warning measures

Along with participating in many free trade agreements, tariff barriers are gradually being removed, the export of many of our products is on the rise, which means facing the risk of trade defense. In particular, recently, the number of investigations against evasion of trade defense measures with Vietnam has tended to increase, especially in the US market.

To support businesses to be more proactive in handling and responding to foreign trade defense investigations, the Prime Minister issued Decision No. 316/QD-TTg dated March 1, 2020 approving the Project on Building and Effectively Operating the Early Warning System on Trade Defense (Project 316). The objective of the project is to warn in advance about export goods at risk of being investigated by foreign countries for trade defense in order to help businesses prepare in advance and help authorities carry out focused and key business support activities.

Seminar “Early warning of trade defense: Maintaining advantages for Vietnamese export goods”

At the seminar "Early warning of trade defense: Maintaining advantages for Vietnamese export goods" organized by Industry and Trade Magazine on the morning of November 6, Ms. Nguyen Thu Trang - Director of the WTO and Integration Center, Vietnam Federation of Commerce and Industry (VCCI) informed that, according to VCCI's monitoring, from 2017 - the time when the protectionist and defensive trends in the world increased - to now, about 6 years, the trade defense cases in this period compared to the cases we faced before have three main differences. These three characteristics all cause difficulties and hardships for Vietnamese export enterprises.

Specifically, the first is about quantity. The number of trade defense cases in recent years has increased much faster than in the previous period. According to statistics from VCCI, from 2017 to present, the number of trade defense cases that Vietnamese export goods have faced in foreign markets accounts for over 52% of the total number of trade defense cases that we have faced in the past 30 years. Of which, the number of cases against evasion of trade defense measures from 2017 to present accounts for nearly 60% of the total number of anti-evasion lawsuits that we have faced so far.

Second , about the products. In the late 1990s and early 2000s, the products that were sued were mainly those with large export turnover and strong export positions or were key export products, such as seafood or footwear. But in recent times, the number of products and sectors of the industries sued for trade defense have expanded significantly.

“Our statistics show that, up to now, there are nearly 40 items that have been sued for trade defense, including items that we have just discovered and the turnover is not too large,” Ms. Trang informed.

Third is the market characteristics. Previously, only key export markets were subject to trade defense lawsuits, but now other markets, including new markets, have a very large proportion of trade defense cases.

Of the total 235 cases to date, the US market accounts for 23% of the cases, India accounts for 14%, Türkiye accounts for 10%, followed by Canada, EU, Philippines, Indonesia. Thus, the risk of being sued for trade defense is in all markets and 24 markets have filed trade defense lawsuits against Vietnam.

Some Vietnamese export goods face trade defense cases

In that context, the application of early warning measures has brought positive results. Mr. Chu Thang Trung - Deputy Director of the Department of Trade Defense, Ministry of Industry and Trade shared that after the Prime Minister's Decision 316, the Ministry of Industry and Trade has continued to upgrade and improve based on existing premises on warning of goods at risk of trade defense investigation and built a relatively complete system. This system is currently monitoring about 170 export items to markets, including many major export markets, which are also markets that regularly have trade defense investigations such as the United States, EU, Canada, Australia, India, etc.

During that process, the Ministry of Industry and Trade periodically filters out high-risk products that are likely to be subject to trade defense investigations. This list is regularly updated and to date, there are products that, after a period of warning, the importing country has conducted trade defense investigations on our products.

“On that basis, we immediately approached businesses to provide information as well as discuss in advance with businesses and associations about the possibilities, risks and tasks that businesses need to prepare in advance. We also recommend that businesses be proactive and positive when participating in such cases. When the importing country conducts an investigation, they will still have conclusions that affect our exports, but the level of impact and influence will be greatly reduced,” Mr. Chung shared.

For example, in some anti-avoidance cases, with active and proactive participation, many enterprises have enjoyed the self-certification and self-confirmation mechanism. With this mechanism, the enterprises' exports to that target market are basically not much affected.

In some other cases, businesses have enjoyed very low or even no taxes. All of this demonstrates the positive effects of the early warning system.

Enterprises join in the action

Regarding the great effects of the early warning system for trade defense measures, Mr. Vu Van Phu - Vice President and General Secretary of the Vietnam Aluminum Association shared that currently, the aluminum industry has popularized to all businesses that in the context of strong integration, the economy is both volatile and difficult as it is now, the trend of protecting domestic production is increasingly popular, this is a trend that must be accepted.

The Association also recommends that businesses proactively equip themselves with adequate knowledge about trade defense and use trade defense measures as a tool to protect their industries and businesses. Businesses also need to diversify their products to diversify their markets and not depend on a certain traditional market. In particular, the Association encourages and recommends that manufacturing businesses should not compete on price, because competing on price increases the risk of being investigated for trade defense.

Besides that initiative, Mr. Vu Van Phu affirmed that the aluminum industry also needs the continuous support of the Ministry of Industry and Trade, especially the Department of Trade Defense in informing, guiding, disseminating and updating knowledge for businesses and industries so that businesses are ready to enter larger playgrounds.

“We consider that information as a special asset that those who know it early will have an advantage. Therefore, early warning information from the Trade Defense Department and trade counselors in other countries will be extremely valuable to our businesses and industries,” Mr. Vu Van Phu affirmed.

In addition, the Vietnam Aluminum Association also has some wishes and proposals for the Ministry of Industry and Trade, the Ministry of Planning and Investment and localities, when calling for investment attraction, they should focus on attracting investment in industries and products with advantages in technology and clean production so that the products have more advantages in the international market. Avoid attracting investment in industries with excess capacity such as the current aluminum industry, leading to the avoidance of some foreign investors coming to Vietnam to wash the origin, avoid trade defense measures affecting the reputation of domestic manufacturers.

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