Firms urged to enhance knowledge, capacity to cope with trade investigations from the UK

Tra fish processed for export. Vietnamese exporters should prepare for trade investigations as Việt Nam is integrating rapidly into the global economy with the enforcement of new-generation free trade deals. — VNA/VNS Photo

Vietnamese exporters to the UK market should enhance their knowledge and capacity to cope with trade remedy investigations as the demand for using trade defense tools by the UK is anticipated to increase along with the rapid growth in trade revenue promoted by the enforcement of the UK- Việt Nam Free Trade Agreement (UKVFTA).

According to the Ministry of Industry and Trade, although Vietnamese enterprises have taken the opportunities arising from the UKVFTA to expand exports to the UK, the potential of cooperation in trade between the two sides remains huge as Việt Nam’s export value to the UK currently accounts for a modest 0.88 per cent of the UK’s total imports.

Chris Milliken, Vice President of the British Chamber of Commerce in Việt Nam, believes that bilateral trade cooperation will be further advanced because the structures of import and export goods of the two countries are complementary rather than competitive.

2021 saw impressive growth in the two-way trade despite the COVID-19 pandemic, as it reached US$6.6 billion, a rise of 17.2 per cent over 2020, making the UK the third largest trade partner of Việt Nam in Europe and ninth in the world.

Việt Nam’s exports to the UK were nearly $5.8 billion last year, up 16.4 per cent. In the first seven months of this year, Việt Nam’s exports to the UK were estimated at nearly $3.5 billion.

The UKVFTA is one among 15 FTAs Việt Nam have participated in. Facing trade remedy lawsuits is unavoidable because trade remedies always accompany international economic integration, according to the Trade Remedies Authority of Việt Nam.

Lê Triệu Dũng, Director of the Trade Remedies Authority of Việt Nam, said that trade remedy was considered an important tool to restrict imports that the World Trade Organisation and FTAs allow members to use under certain conditions.

Dũng said with the impact of international integration coupled with increasing protectionist policies in some markets, the number of trade remedy investigations was anticipated to increase considerably.

As of the end of the first quarter of this year, Vietnamese export goods were subject to 212 trade remedy lawsuits.

Under the UKVFTA, Việt Nam and the UK will follow appropriate procedures for conducting fair and transparent trade remedy investigations and allow interested parties the opportunity to provide their views in anti-dumping and countervailing investigations.

The trade deal also provides for the application of the ‘lesser duty rule,’ and includes provisions to ensure that neither Party may apply multiple safeguard measures to the same good, at the same time.

The UKVFTA contains commitments on the application of bilateral safeguard measures during the first 10 years of entry into force. Bilateral safeguard measures can be implemented to protect a domestic industry if they face harm from import increases as a result of tariff elimination under the UKVFTA.

According to the Trade Remedies Authority of Việt Nam, the UK developed its own trade remedies system after Brexit.

Encountering trade remedy investigations from an import market like the UK could be a difficulty for Vietnamese exporters. The authority urged Vietnamese exporters to regularly monitor and evaluate early warning recommendations for goods at risk of being investigated for trade remedies, which would help enterprises to have appropriate business plans and reduce the negative impact when facing with trade remedies investigations or applications.

Enterprises should also assess the market size and benefits to come up with an appropriate response plan to the trade remedy lawsuits.

In case an enterprise does not cooperate, the UK can use the available data to draw conclusions. Usually, the trade remedy tax rate for non-cooperating enterprises is very high so they might be forced to abandon the market.

Enterprises must also be aware that it would take a lot of time and effort to follow the investigation process. Thus, enterprises should weigh the benefits to decide how to respond to investigations, the authority said.

During the process of responding to the lawsuits, enterprises should cooperate with relevant parties, including the Trade Remedies Authority of Việt Nam and enterprises in the same industry, to develop a plan to cope with lawsuits.

In some cases, Vietnamese export products were imposed lower tax rates than others, which bring certain competitive benefits, the authority stressed.