Change of anti-tax avoidance approach: A big danger

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Steel is a typical industry that often faces trade defence cases. Photo: Nguyen Thanh.

Huge changes

According to the Trade Defence Department (Ministry of Industry and Trade), in the first seven months of this year, the frequency of trade defence cases with Vietnam's export goods remained at a high level (an average of one case per month). Currently, the Ministry of Industry and Trade is handling seven trade defencedefence cases (five anti-dumping cases and two subsidy cases) initiating investigations with Vietnam's export products. In seven cases of initiating new investigations, the Indian market led with four cases, the US two cases and Malaysia one.

In the story of trade defence suit, Deputy Minister of Industry and Trade Tran Quoc Khanh expressed his interest in anti-tax lawsuits. For example, in the case of steel, Khanh stated: “In the past 70 years, the production of hot-rolled steel sheets from Vietnam is considered by the US as a process of fundamental transformation. However, if Vietnam now uses China hot rolled steel to produce steel sheet for export to the US, it will be considered as an avoidance of anti-dumping measures that the US applies to China. This is a very big change in America's approach”.

Khanh commented: “This change is very dangerous for Vietnam. Because, the importing countries like the US can apply maximum anti-tax avoidance measures. If one day they improvised this approach for both textiles, footwear, cashew nuts... the more dangerous the story”. According to Khanh, the trade defence Department needs to study immediately the big change in the approach to tax avoidance investigation of countries; whether to change this approach in accordance with WTO rules. At the same time, it should determine which items are at high risk of being applied this new approach to warn, especially in the context of US-China trade conflict.

Minister of Industry and Trade Tran Tuan Anh also emphasised that in the near future, it is possible many partner markets will bring higher protection psychology. Technical barriers, even administrative barriers, are also tightened.

Closely watch the situation to forecast

According to Minister Tran Tuan Anh, the immediate task is to keep abreast of developments, make judgments and make timely forecasts to respond. There is a need to strengthen international cooperation, based on the legal framework for further cooperation with markets such as the US, China and EU to further institutionalise cooperation mechanisms, ensuring balanced benefits.

A representative of the General Department of Market Management (Ministry of Industry and Trade) stated that in the face of complicated developments of the US-China trade war, the trade defence Department is requested to soon establish a project working group "Strengthen management of the State on combating avoidance of trade defence measures and origin fraud" approved by the Prime Minister recently. At the same time, the department also needs to update the list of export enterprises soon, importing into US and Chinese markets, focus on considering businesses at risk of taking advantage of trade war to export and import to the US market, potentially cheating goods origin. "In the coming time, the General Department of Market Management will coordinate with relevant agencies to strengthen inspection and better market control, especially fraudulent acts of origin of goods," this representative said.

Around the story of responding to trade defence measures in markets, especially against trade defence, according to representatives of the Asia-Africa Market Department (Ministry of Industry and Trade), it is necessary to build systems enterprise data, especially enterprises with import and export activities with the US and China markets. Knowing this issue will be more active in warning businesses in a perspective that should not focus too much on some markets, with the need to diversify export markets.

In another perspective, in recent times, Vietnam has talked a lot about cheating in the origin of goods exported to other markets, for example, Chinese cheating goods originating from Vietnam and exporting to other countries but not paying attention to the problem of goods of fraudulent countries. For example, Ecuadorian shrimp borrowed Vietnam origin to export to China or had a case of Indian peppers mixed into Vietnamese chillis to export to China. Foreign agricultural products also take advantage of exchanging border residents between Vietnam and China to export. The Chinese Customs side has reflected these stories. This is a matter of concern and local recommendation as well as related agencies.

Le Trieu Dung - Director of trade defence Department said that in the context of increasing protectionism, especially for many product groups such as steel, aluminum, agricultural products and seafood, to minimise the possibility of trade defence measures requires a comprehensive, long-term strategy in developing production chains, improving added value for Vietnam's export products. Besides, even if Vietnam can develop a chain of production in Vietnam (for example, for steel and aluminum), if Vietnam's exports increase rapidly and suddenly, apart from anti-avoidance measures, no except for the possibility that the importing country will investigate anti-dumping and subsidies with Vietnam's products as previously done with some other countries.

"Therefore, in addition to focusing on in-depth development, Vietnam also needs to closely monitor for early warning if our exports to some markets rapidly increase. In order to effectively implement this warning, there needs to be close coordination between the Ministry of Industry and Trade and the concerned ministries and branches, especially the General Department of Customs (Ministry of Finance),” Dung said.