“Living” with a trade remedies lawsuit

Many steel enterprises have devoted adequate resources to respond to trade remedies, obtaining initial positive results. Photo: Duc Quang

Vietnamese goods can be sued in all markets

According to the Trade Protection Department (Ministry of Industry and Trade), the number of foreign trade defense cases against Vietnam's export goods has increased rapidly.

In the 2005-2010 period, there were only 25 cases, this number in the 2011-2015 period was 52; the period from 2016 to September 2021 is 109 cases.

Deputy Minister of Industry and Trade Tran Quoc Khanh noted that the number of anti-circumvention cases targeting export goods from Vietnam is showing signs of increasing because some countries believe that export goods use main materials imported from areas where they are applying trade remedies.

Analyzing from the specific case of the European Union–Vietnam Free Trade Agreement (EVFTA), Pham Chau Giang, Deputy Director of the Trade Protection Department (Ministry of Industry and Trade), said that so far, the EU has just initiated an investigation into the trade remedies of 14 cases against Vietnam.

“However, in the context that Vietnam participates more and more deeply in FTAs, especially new generation FTAs such as the EVFTA, trade defense cases for Vietnam's exports will be more and more complicated," the leader of the Trade Protection Department said.

Steel is one of the typical export industries that often faces trade remedies lawsuits.

Dinh Quoc Thai, General Secretary of the Vietnam Steel Association said: The signing and implementation of a series of FTAs by Vietnam has created favorable conditions for businesses to expand their markets and promote exports. For the steel industry, in the 2016-2021 period, the average growth in exports of steel and semi-finished steel products is more than 20% per year. In which, the export of finished steel products alone grows by 12% per year. In the first 10 months of 2021, Vietnam exported about 6.5 million tons of steel, up by 17% compared to the same period in 2020.

“In the last 10 years, along with strong growth in scale and quality, Vietnamese steel is one of the commodities with a significant increase in the number of lawsuits initiated by foreign countries. Specifically, from 2004 to October 2021, Vietnam's steel exports faced 66 lawsuits. Vietnam is deeply involved in the international market, so it is understandable and normal for export goods to be investigated for trade remedies, especially for important industries that play a pivotal role like the steel industry," Dinh Quoc Thai said.

Nghiem Xuan Da, Chairman of Vietnam Steel Association and Chairman of the Council of the Association of Southeast Asian Steel (AISC), added: Through monitoring recent developments, the Vietnam Steel Association found that trade remedy lawsuits against Vietnam's exported steel as well as many other goods not only occur in major markets such as the US, Canada, Australia, Europe, but also happens more and more in countries in the region such as Thailand, Indonesia, Malaysia. It shows a very clear trend that exported goods from Vietnam can be subject to trade remedies in any country, large or small market, in any field or type of goods.

Diversify markets, develop domestic raw materials

Regarding the response to trade remedies lawsuits from foreign countries for Vietnamese goods, Dinh Quoc Thai said: In the first stage, steel manufacturing enterprises faced many difficulties and challenges. The root cause is the limited awareness of businesses about trade remedies, and at the same time, weak capacity to participate in lawsuits. The level of understanding about these measures of many domestic enterprises is still incomplete, leading to certain issues when faced with dispute settlement.

Thai also mentioned a series of difficulties such as language ability (there are cases where the investigative agency requires the local language rather than English); limited knowledge of international law, international commercial litigation, and procedures for settling lawsuits; financial capacity and qualified and experienced human resources to pursue lengthy lawsuits of enterprises are still weak.

"Notably, in the early stages, the coordination and communication between steel enterprises, associations and management agencies is not really effective," said Thai.

However, after that, the awareness of enterprises in the industry about fair trade has improved rapidly, there are large enterprises such as Hoa Phat Group, Hoa Sen Group, which export to large markets such as the US and the EU, which often applied measures. However, these enterprises have devoted adequate resources to respond to trade remedies and obtained positive initial results.

Nghiem Xuan Da said steel enterprises have been diversifying products, expanding and diversifying export markets. Vietnamese steel is not only present in the traditional market of Southeast Asian countries, but also expands to large markets that require strict quality and environmental standards such as the US and Europe.

“Thus, one of the solutions to improve efficiency and reduce the risks of trade lawsuits that businesses need to pay attention to is to diversify products and export markets to reduce risks and avoid focusing on exporting in large volume to one market. In addition, businesses need to develop value chains, develop domestic raw materials, improve competitiveness for export products, and develop brands," said Nghien Xuan Da.

In order to perfect the legal framework, institutions as well as policies on trade, in early October 2021, the Prime Minister signed Decision No. 1659/QD-TTg approving the project on enhancing trade remedy capacity in the context of Việt Nam's participation in new generation FTAs.

The project creates a comprehensive framework to facilitate the enhancement of the efficiency of trade remedies to legally and reasonably protect domestic production, and to improve the understanding and capacity of enterprises and associations about trade remedy tools, and at the same time have strategies and coordination mechanisms to effectively respond to trade remedies lawsuits against Vietnam's exports.

The representative of the Ministry of Industry and Trade said that the MOIT is coordinating with relevant ministries and branches to develop an action plan to implement the scheme, ensuring the full implementation of the set goals, protecting the legitimate rights and interests of Vietnamese manufacturing industries and enterprises in the process of participating in FTAs.