The fight against origin fraud and its problems Part 2: The tricks of origin fraud

	The fight against origin fraud and raised issues - Part 1: When the war of the "giants" broke out
	Twelve products may face trade origin fraud investigation: Authority

The factory is empty but the business still produces a series of "Made in Vietnam" bicycle products. (The case was discovered and handled by the Post Clearance Audit Department and Binh Duong Customs Department in October 2019) Photo: Post Clearance Audit Department.

Convert components into Vietnamese goods

At a press conference on inspection and investigation of fraud prevention and control of the origin of Vietnamese goods exported by the Customs sector, organized by the General Department of Customs on July 6, 2020, leaders of the Inspection Departmentsaid that following the direction of the General Department's leaders, the whole sector implemented the anti-fraud and illegal transmission plan (from October 2019), of which the Department of Post-clearance inspection is the key force.

After a period of active struggle with businesses showing signs of doubt, the whole Customs Department has checked, investigated and verified 76 cases and discovered 24 cases of violations of goods origin. Customs authorities have confiscated 3,590 complete bikes, more than 4,000 sets of bicycle parts and more than 12,000 sets of kitchen cabinet components as evidence. Some typical topics related to items: bicycles, electric bicycles; solar batteries; wood and wooden furniture.

For bicycles and electric bicycles, post-clearance inspection was conducted by four enterprises assembling bicycles and electric bicycles exported to the US.

Violations of enterprises are to fully import parts and components of electric bicycles, which are not yet assembled or disassembled to Vietnam to assemble into fully-electric bicycle and bicycle products. Imported parts and components do not undergo any other processing or manufacturing processes or simply go through simple processes that do not change the nature of goods (processing frame paints, pallets, inscriptions on handlebars, print labels for a number of products) to become a complete product and all components directly converted into finished bicycles and electric bicycles. According to the Post-clearance Inspection Department, the above-mentioned production process is not eligible for "Vietnam" origin according to code conversion criteria, origin criteria (CTC, CTSH) and percentage criteria of value (LVC) prescribed in Decree 31/2018 / ND-CP and Circular No. 05/2018 / TT-BCT dated April 3, 2018 of the Ministry of Industry and Trade.

For the group of solar batteries, five post-clearance inspections showed that 100% of the businesses were tested for violations of Vietnamese origin.

Specifically, the exporter of solar module panels is produced from the main source of photovoltaic panels that are purchased by the business from suppliers manufactured in Vietnam and imported directly from abroad. Solar panels for export are manufactured from photovoltaic panels imported from abroad that do not meet the origin criteria (CTSH) to be recognized as Vietnamese-origin goods according to the regulations.

For wood products and wooden furniture, post-clearance inspections revealed 12 enterprises that violated Vietnamese origin. Accordingly, the enterprise imports (or acquires from imported goods) in the form of loose parts, complete or imported in the form of semi-finished products for simple processing (drilling holes, sanding and painting) assembled into finished products; cabinets, bookshelves, beds, sofa tables, tea tables and cocktail tables, that do not meet the criteria of Vietnamese origin as prescribed in Decree 31/2018 / ND-CP and Circular No. 05/2018 / TT-BCT dated 3/4/2018 of Ministry of Industry and Trade.

Thus, it can be seen that the typical violation in cases performed by the Post-Clearance Inspection Department is that the enterprise imports all components to assemble into a finished product converted into Vietnamese goods.

TOPPER shoes in a temporary shipment imported from China for export to a third country but the product inscribed "Made in Vietnam", discovered by Hai Phong Customs in May 2019. Photo: T. Binh

Diversity of ways and tricks for fraud

The typical cases discovered by the Post-Clearance Inspection force are only part of the picture of goods origin fraud.

Commenting on the methods and tricks of origin fraud, representatives of the relevant agencies of the General Department of Customs added that through the inspection, supervision and management when carrying out customs procedures for import and export goods and the anti-smuggling investigation, post-clearance inspection, inspection; customs offices have discovered many other methods and tricks related to fraud, fake origin and labeling of goods.

Specifically, for the labeling of goods, infringement of intellectual property rights, goods made in foreign countries when importing to Vietnam, the words "Made in Vietnam" have already been inscribed on the product or packaging, warranty card expressed in Vietnamese information about the brand, address of the business headquarters, website, warranty center inVietnam for domestic consumption or export.

In other cases, goods imported from abroad, affixed with labels or inscribed with the origin of goods manufactured abroad or not showing the country of origin on goods labels but when put into circulation or domestic consumption then the enterprise replaces the label with "Made in Vietnam".

In particular, there are cases of taking advantage of the provisions of legal documents that are not required to have secondary labels right at the customs clearance stage to import well-known brandsand then do not apply secondary labels as prescribed but instead exchange labels, packages and brand names for domestic consumption.

There are also cases of importing counterfeit trademarked goods that have registered for intellectual property protection; taking advantage of transit forms to transport fake goods, goods infringing on intellectual property rights or counterfeiting Vietnamese origin.

Regarding origin of goods, infringing tactics are Vietnamese enterprises and FDI enterprises that import materials, semi-finished products, components, and spare parts for production, processing and assembly of goods that do not undergo processing or production or simply undergo processing, manufacturing or simple assembly which do not meet the origin criteria as prescribed, but when exported, declare Vietnamese origin on goods labels or legalizing the application file for a certificate of origin of Vietnam.

In other cases, many companies are established, each of which imports a number of assemblies, spare parts or components for assembly or sale to another company for simple processing without meeting the origin criteria, but with“made in Vietnam” or origin of Vietnam for consumption in the domestic market in order to deceive consumers or export.

More concerning is the situation in which goods originating from abroad are transferred to Vietnam to legalize dossiers or apply for certificates of origin and then export to third countries. On the other hand, there are cases of using fake or invalid C/O, misrepresenting the origin of goods to apply the special preferential tax rates under FTAs when clearing customs.

The series of tactics mentioned above shows that the fraud of goods origin, infringement of intellectual property rights takes place. With the new generation of free trade agreements with many great tax incentives that Vietnam has just joined, the risk of foreign goods "suddenly" Vietnam's goods to gain illicit benefits with sophisticated tricks.