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Government plans alarm system for export products to help firms evade legal pitfalls

Authorities have asked bicycle manufacturers to avoid involvement in fraudulent trade deals that might end up with the European Union imposing punitive measures on Vietnamese bikes .

The government is preparing an early warning system that will help Vietnamese businesses avoid expensive lawsuits in export markets that they are trying to establish or expand their presence in.

Le Danh Vinh, deputy minister of Industry and Trade, said his ministry would introduce the system for export products next month as part of efforts to help exporters escape punitive measures imposed by governments that want to protect domestic industries and businesses.

Vinh said the system would set out alerts in an ascending order of yellow, green and red, warning local businesses about which product of theirs is dominating or threatening domestic counterparts.

Punitive measures not only hurt local businesses in export markets but also domestic industries at home, he said.

In the first phase, the system would focus on five key export products: garment and apparel, footwear, seafood, wooden furniture and cable wires. It would assess and develop warnings based on how these products are faring or likely to fare in their largest markets Europe and the US.

Businesses should be alerted about when and how these products are most likely to confront adverse reactions in export markets including lawsuits, said Bach Van Mung, head of the ministry's Vietnam Competition Authority. Mung said the system would expand to cover 20 products and ten export markets in its third phase late next year.

Shanghai in China was the first locality in the world to introduce such a warning system, and Vietnam will be the second, Mung told Thanh Nien Weekly.

He said the Vietnamese government had planned the system as it prepared for membership in the World Trade Organization. Vietnam became a WTO member in 2007.

Local businesses in export markets tend to ask for safeguards and antidumping or countervailing taxes when imported products grow very rapidly, gain significant market share, or, sell at much lower than prevailing market prices.

Mung said 34 lawsuits have been filed so far against local businesses in the footwear, garments, home appliances, plastics, rubbers, bikes, cable wires and wooden furniture industries since 1994, and these have generally been based on unreasonable and unfair grounds.

Electronic components, products and computers accounted for the most number of lawsuits with eight cases, followed by footwear with five, said Mung, adding the markets where Vietnamese products had to face the highest number of lawsuits so far was Europe with ten cases, and Turkey with five.

He said the number of lawsuits was increasing, corresponding with

Vietnam's export growth in years, and a warning system was necessary to help local exporters survive and flourish in international markets.

Mung said Vietnamese plastic bags the first export product from the country that was hit by two taxes at the same time could have avoided the antidumping and countervailing taxes imposed by the US if they'd received early warnings.

Like China, Vietnam is becoming a leading exporter of garments, footwear, seafood and agricultural products due to abundant low-cost labor, exerting pressure on domestic producers in export markets, he said.

Vietnamese firms are also included in lawsuits filed against Chinese exporters as they are geographically close to each other and investors find it easy to move their factories from the mainland to its neighboring country in the south to avoid punitive measures.

Diep Thanh Kiet, deputy chairman of Vietnam's Leather and Footwear Association, said a warning system was needed for exporters who traded without knowledge of shipments on a national scale that would affect their business deals.

Local exporters have suffered punitive measures in several markets due to the lack of timely warnings, said Kiet who is also deputy chairman of HCMC Association of Garments, Textile, Embroidery and Knitting.

However, he cautioned that the system should give out correct warnings because any failure would make it a new hindrance and barrier to exports.

Kiet added another word of caution, saying there was a possibility that businesses or associations in the export markets might use the Vietnamese warning system to take legal action against local exporters even if they'd had no such plans earlier.

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