Anxiety about origin fraud in importing kitchen cabinets, three large Ministries involved

illustration image: Source: Internet

As reflected by member businesses of the Timber and Forest Product Association (Viforest), recently, several enterprises have imported parts of kitchen and bathroom cabinets (high-risk items) from China to Vietnam.

The import is through the following forms: Vietnamese companies that are newly established or operating in the last 1-2 years, imported kitchen cabinet parts, bathroom cabinets, plywood, and then processed and assembled into finished products (processed content is very low) for export to the US.

Vietnamese companies import parts of products with risk factors to Vietnam, trading through different companies. These parts will later be grouped by a company, which assembles and takes its own name for its manufactured products for export to the US.

Although there are no results to verify the above information, the value of importing and exporting risky items has been increasing.

To prevent fraud and evasion of origin of goods and in the context that the US is investigating the plywood industry to avoid fraud, in a recent document sent to the Ministry of Industry and Trade, the Ministry of Finance, and the Ministry of Agriculture and Rural Development, Viforest proposed the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, and the Ministry of Finance to direct specialized agencies to organize unscheduled inspections of suspicious enterprises (enterprises importing high-risk items with fast-growing value).

This move is to take measures to prevent and promptly handle violations (if any) for individuals and enterprises importing risky wood products.

Mr. Do Xuan Lap, Chairman of Viforest, added that in the past two years, the US has applied trade remedies to several wood products exported from China. Specifically, the application of anti-dumping tax, high subsidies with tax rates from 55% to nearly 200% on some items such as plywood, kitchen cabinets, bathroom cabinets, wooden sofas, etc.

This causes some Chinese enterprises to invest or find ways to avoid the above tax rate, of which Vietnam can be selected as one of the destinations.

The export value of the wood industry has increased sharply in the past two years, which is a good thing, but there are also potential risk factors due to the increased export value of products that the US is applying trade remedies measures for China.

According to statistics of the General Department of Vietnam Customs, in the first three months of 2021, Vietnam's export value of wood products reached over US$3.788 billion, up 44.9% over the same period last year. In which, exports to the US market reached over US$2.29 billion, up 77.02% over the same period in 2020, accounting for 61% of the total export turnover of the whole wood industry (this rate reached 50% of the same period in 2020).

Exports to the US increased sharply compared to 2020 including: plywood reached US$89.64 million, up 34%; upholstered wooden seats (plywood inner frame) reached US$512.95 million, up 146%; wooden kitchen furniture reached US$145.85 million, up 101%.

On the import side, in the first three months of the year it reached nearly US$729 million, up 37.2% over the same period in 2020; in which from China reached US$225 million, increased by over 50%, accounting for 31% of total import value.

Goods imported from China include plywood with US$49.27 million, up 71%; wooden sofa frame US$36.70 million, up 46%; kitchen cabinets, bathroom cabinets US$30.17 million, up 41%. These are items that are subject to anti-dumping duties and subsidies by the US when exporting from China.