Exporters to face more trade restrictions this year

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Some key export commodities are facing the increasing risk of trade remedies this year, especially anti-dumping lawsuits from importers, experts have warned.

Some of Vietnam's top sectors, such as garments, steel and woodwork, are on the list of affected products.

Former deputy minister of Industry and Trade Phan The Rue said trade remedies imposed on Vietnam would become more "diverse" in the near future.

"In addition to remedies relating to product quality, subsidies to export industrial products, and food hygiene, regulations on goods' origin and environmental standards are increasing and getting stricter," he said.

Trade remedy expert Dr. Peter J. Koenig, an attorney with global law firm Squire Sanders, said export commodities that are vulnerable to investigation for antidumping and countervailing duties included mostly items produced in small volumes by importing countries.

Vietnam's key export commodities such as garments, steel, woodwork and handicrafts are vulnerable to the lawsuits, he said. Some other commodities such as chemical and plastic products are also at risk of investigation despite their small export volumes.

Antonio Berenguer, trade counselor of the EU delegation to Vietnam, said Vietnamese exports are facing stricter requirements from the EU, as the market is increasingly interested in the origin of products.

For example, to ensure environmental protection and sustainable development, the EU requires that businesses selling timber to the market for the first time must conduct a due diligence test to minimize the risk that the timber comes from an illegal source.

Rue said this is one of the big barriers to Vietnam exports to the EU, as the country's key export industries such as textiles and garments, footwear and woodwork are still heavily dependent on the import of materials.

Vietnamese commodities faced 42 investigations into anti-dumping cases and trade remedies in 2009, according to the Vietnam Chamber of Commerce and Industry.

Rue said firms have not studied their importers' trade policies and legal systems. They have not used the services of international legal consultants before infiltrating the markets, he added. "Vietnamese firms should study

bilateral and multilateral trade agreements, and use legal consultancy services in all stages from negotiating with partners, signing contracts, implementing contracts, to dealing with disputes."

Besides, Vietnamese firms have yet to cooperate fully when doing business in foreign markets, he said. And he described competition within Vietnamese industries as unsound, another barrier to effective exporting.

Other experts have pointed out that many firms are not prepared to handle lawsuits when they happen. Others have shown no inclination to engage with the problem and simply let the lawsuits or investigations run their course, analysts have said.

Expand the market to reduce risks

Vu Ba Phu, deputy general director of the Competition Agency at the Ministry of Industry and Trade, said Vietnamese firms should cooperate more with investigation agencies in the countries to which they export.

He said that the PE plastic bags of a Vietnamese firm had been hit with anti-dumping duties of only 0.44 percent after it had actively cooperated with a US investigation agency in the anti-dumping case. Meanwhile, products from two firms from other countries that did not cooperate were slapped with duties of 52 percent in the same case.

"Close cooperation between exporters and importers on issues relating to the import market is necessary," said Phu. Firms and associations should also help each other handle such cases to build a stronger response. He also urged firms not to sign shipment contracts at low prices.

Rue said firms should not depend too much on one market. "It is necessary to expand markets and seek more new partners. Dividing market shares will reduce the risk (of trade remedies)."

Tran Huu Huynh, general secretary of the Vietnam International Arbitrator Center, said the state should have a system warning firms of the risks of trade remedies. He added that locals needed to more actively follow overseas market trends.

Phu from the competition agency said such a warning system was in its trial stage. After its pilot launch scheduled for this September, the system will provide firms with global trade information collected from Vietnam's departments of commercial affairs abroad, and customs agencies in importing countries.

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