Preventive measures taken to deal with trade defence

Experts warn that businesses need to take preventive measures to avoid losing export markets in the coming time.

According to the Department of Trade Defence under the Ministry of Industry and Trade, Vietnam has faced a total of more than 130 trade defence lawsuits including 77 anti-dumping lawsuits, 10 anti-subsidy investigations, 22 self-defence investigations and 17 tax avoidance and evasion investigations.

Most of these cases have been lodged by the US, Turkey, India, the EU and Australia. Steel products like cold-rolled steel have been selected for regular investigation, with30 lawsuits having been launched.

Five trends of trade defence

Many nations in the world have erected barriers such as trade defence instruments to restrict free trade. Ms Tran LanHuong from the Department of Trade Defence points out that five trends of trade defence lawsuits will be applied.

Firstly, class action lawsuits have become popular practise, which means that a lawsuit is filed by many nations at the same time. Products subject to trade defence investigations are closely associated with the goods of other nations which have posted higher export turnovers.

The second trend is in lawsuits against tax avoidance and evasion. All cases of tariff avoidance for Vietnam relate to accusations of avoiding taxes from China. Therefore, when the tariffs were imposed on China, Vietnamese businesses have faced risks of competing fiercely with the products in markets which slap duties on China.

Ms Huong says when the incident has happened to China, similar incidents will also happen to Vietnam over the next two years in the form of anti-dumping, tax avoidance and evasion.

The third trend is the domino lawsuit. When a country files a lawsuit, other nations will follow their lead and lodge further lawsuits. This means that when Vietnam is sued on one market, it is not certain that the nation will escape lawsuits in other markets.

Many businesses think that their products are exported to multiple markets and if the US investigates their products and imposes duties, they will easily drop this market. However, businesses are unable to foresee whether or not their products will be subject to lawsuits in their remaining markets.

The fourth trend is the double lawsuit which means that anti-dumping and anti-subsidy lawsuits are launched at the same time. These measures are taken by major countries or economic areas such as the US, EU, and Canada.

MsHuong says there is a worrying trend that foreign nations have conducted investigations by imposing measures to limit imports due to national security.

For example, on February 16, the US Department of Commerce considered imposing tariffs on steel and aluminum imports, in order to limit the import of these products according to Section 232 of the Trade Expansion Act of 1962.

The Act authorizes the Secretary of Commerce to conduct comprehensive investigations to determine the effects of the import of any article on the national security of the United States.

Mr Phan Khanh An from the Department of Trade Defence says businesses can lose their markets if lawsuits are filed. For example, the US imposed countervailing duties on imports of steel nails from Vietnam in 2014. As a result, their export value fell from U$36 million to US$800,000 in 2015.

Vietnamese stainless steel pressure pipes also suffered anti-dumping duties from the US in 2013, leading to their export value dropping from US$178 million to US$87 million in 2014 and 2015.

Brazil also slapped anti-dumping tariffs on Vietnamese tyre exports in 2012, leading to the export value plummeting from US$5.7 million to US$1.9 million in 2013 and US$650,000 in 2014 and just US$575,000 million in 2015.

The figure has shown that trade defence measures can block products from penetrating markets and seriously affect export businesses, says Mr An.

Ms Huong warns that businesses need to avoid these cases by persifying their export markets to curb their losses. In markets which have applied trade defence instruments like the US and India, businesses should learn more about their laws and regulations and discover whether these nations have previously imposed trade defence measures on any nation. When the lawsuit is filed, businesses need to deal with the incident by all means.

The Ministry of Industry and Trade recommends that businesses consider hiring lawyers to provide consultancy on trade defence measures which are a combination of complicated issues related to economics, accountancy, finance and law. Businesses need to gain insights into agencies’ methods of investigation to properly prepare documents for any lawsuits.

Lastly, businesses need to identify their strategy and targets, as they can lose costs in such lawsuits but can prevent similar incidents in other markets in future.

At the same time, the ministry advises businesses to strengthen solidarity and cooperation to deal with the similar cases, as foreign nations have imposed tariffs on the Vietnamese market, not specific businesses.