Being prepared to respond to Trade Defense cases

Wood is one of the industries most susceptible to trade defense lawsuits.

Commercial Litigation put pressure on Business

According to Trade Remedies Authority of Vietnam’s database, as of the end of September 2020, our country has recorded and handled 193 trade defense cases that foreign countries have applied to Vietnam. Specifically, there are 108 anti-dumping cases, 22 anti-subsidy cases, 23 anti-evasion cases, 40 self-defense cases. Vietnamese goods have been investigated for trade defense with the affected turnover of up to 12 billion USD.

It is noteworthy that the number and turnover of the aforementioned cases has been increasing rapidly in recent years. If there were only 16 new initiation cases recorded in 2019, the first 9 months of 2020 recorded a double number of cases (32 cases).

The trend of foreign anti-dumping investigations on Vietnam’s export products recently happened more frequently. The reason stemmed from the growing Vietnamese economy and increasing production capacity, so Vietnam’s export products were increasingly diversified in types and had a rapid growth in turnover. When the tariff barriers on Vietnamese goods are removed, there will be conditions to compete with domestic producers in the import market. This forces them to turn to legitimate trade policy tools to protect their interests.

Meanwhile, international business experience of Vietnamese enterprises has been enhanced, but is still incomplete, especially for small and medium enterprises. Vietnamese enterprises are currently lacking information about the principles, processes, procedures, obligations and interests when participating in investigative cases, are hindered in response resources, language, limited time to provide information for transparent investigation, etc. These issues will make it more difficult for Vietnamese enterprises to get involved in commercial lawsuits.

Efforts to support Vietnamese enterprises

Faced with the pressure of integration and risk of applying trade remedies in exports, none better than one, our business community needs to improve its coping capacity. According to Mr. Nguyen Tien Chuong, Chairman of Dong Nai Import and Export Association cum Director of Dong A Trading Services Company Limited, if compared with foreign-invested enterprises, Vietnamese enterprises still lack a specialized department on import and export, so it will be very passive when an incident occurs.

Therefore, for Vietnamese enterprises, in parallel with updating international business knowledge and investing in human resources, they may directly receive consultation from the Import and Export Association when there difficulties occurs. The Association will have experts, reputable lawyers, experienced in international trade ready who are ready to assist its members, from drafting contracts to handling commercial disputes, etc.

Similarly, for the wood industry, anti-dumping and tax evasion will be a warning story for the whole wood industry if there is no interest and professionalism from the beginning in production and export, especially the building of the value chain, modernization of the management system, and development of legal raw materials. This is a prominent issue that the Handicraft and Wood Industry Association of Dong Nai (DOWA) need to be alert.