2009 is a difficult year for Vietnam exports. While the world market has not yet fully overcome the crisis with sharp drop in export orders, Vietnam has met with lots of barriers, particularly anti-dumping, countervailing or safeguard measures which are often called trade remedies.
Will the situation repeat next year? Enterprises and associations can learn from the experience from this year? To answer this question, Vietnam Business Forum reporter Anh Phuong had an interview with Dr. Nguyen Thi Thu Trang, member of the Trade Remedies Council (TRC) under the Vietnam Chamber of Commerce and Industry (VCCI).
Could you brief the trade remedies imposed on Vietnamese exports this year?
2009 is the record year for Vietnam to cope with importer’s trade remedies and also the record of “things” which have appeared for the first time in the lawsuits.
Could you give more details on this?
This year, Vietnam has encountered a total seven lawsuits on anti-dumping, countervailing or safeguard measures for exports, comprising five anti-dumping cases, one countervailing case and one safeguard measure in the five markets of the US, India, Turkey, Canada and Brazil.
The figure does not include next inspections of the lawsuits in the previous years (the US’s administrative inspection on export of shrimp and tra and basa fish and the EU’s inspection on leather footwear and cap).
Besides, this year, several other sectors have also been put at the “alarming situation” on the risk of trade remedies, including paper, seafood and ceramics. Luckily, the risk has not yet happened in 2009, but no one can say for sure that Vietnam can avoid the risk in the coming years.
Experts forecast said Vietnam is likely to see more trade remedies next year.
It is often said that export increase will result in higher risks in facing trade remedies. Despite meeting with many difficulties this year, has the export sector witnessed a sharp rise in coping with trade remedies?
There is a direct proportion between the increase in export volume and the risk of facing trade lawsuits imposed by importers. However, in addition to export volume, the lawsuits can be caused by many other reasons.
In reality, the number of lawsuits against Vietnamese exporters in 2009 is rising.
In 2007, when the global economy started falling into the crisis time, consumption demand in traditional markets became narrower, leading to the drastic drop in export order as well as volume and revenue.
Nevertheless, many experts warned about another risk: the crisis will push importers’ domestic production situation into difficulties. Therefore, they are likely to call on their government to take trade remedies on imports, including the petition submission to ask for the application of protective measures. The lawsuits occurring in 2008 and 2009 were clear evidences for this.
Have Vietnamese enterprises received the warning of this?
The TRC under the VCCI has warned local firms since 2008. But not many of them have paid due attention to the warning. In the challenging time, Vietnamese companies have mostly focused on preventing losses, maintaining their business activities by improving competitiveness and access capacity to markets. As a result, the majority of them were surprised at the lawsuits so far this year.
As you said, this year has seen the first appearance of many issues. Is this a reason for the shock of many enterprises and associations?
That’s true. Not only companies and associations but also we are surprised at the lawsuits. This year can be considered the year of many issues which appeared for the first time in Vietnamese’s history to fight trade remedies.
This is the first time Vietnamese exports have encountered the countervailing lawsuit, which was indicated in the case of the US’s countervailing lawsuit on local PE bags.
The event has brought about many challenges for local exporters. Besides, Vietnamese exports are no longer excluded from the US’s anti-dumping lawsuit (Previously, the US did not impose countervailing inspection on products imported non-market economies). It is not exaggerative to say that other items should be cautious of the risk of encountering the US’s countervailing. Moreover, in the context of the national economic challenges, the Vietnamese government has carried out many measures to give financial support for sectors. Thus, the first lawsuit can be the serious precedent for Vietnam’s other exports.
This year, a Vietnamese product, PE bags, coped with two lawsuits simultaneously in the US for the first time.
To date, lawsuits on Vietnamese goods are still single (anti-dumping and safeguards). It is not easy for Vietnamese companies and associations to deal with the lawsuits. Particularly, they have to make greater effort in case of double lawsuits, while they do not make careful preparations for this (especially payment for consultant lawyers). Additionally, arguments against one lawsuit can be opposite and lead to difficulties for others (for instance, arguments on non-market economies).
Apart from this, it is not the first time that Vietnamese products of modest volume have met with importers’ lawsuits.
Among the seven lawsuits on local exports since early this year, there are two related to the small volume of exports, consisting of anti-dumping on shoes in Brazil and safeguard measures on steel in India.
Brazil is the biggest shoe exporter in the world; hence, it is very hard for Vietnamese firms to enter the market. Despite this, the Brazilian footwear sector still felt the threat from Vietnamese imports and the country sued Vietnam. Steel is a main import of Vietnam. The country only re-exported this product to India in case of export redundancy. However, Vietnam is still listed among 14 countries facing India’s safeguard measures.
The Brazilian case was over and the India case will not result in bad impacts on the Vietnamese steel industry. However, the cases showed that in spite of small export volume, Vietnamese products can suffer from trade remedies when they are present at competitive markets. In the past, there were many such cases and this year may be another warning for Vietnamese exporters of the risk.
What is your advice for local exporters?
Risks can be changing, but we have familiar advice for Vietnamese exporters. Firstly, enterprises and associations should have proper understanding about impacts of trade remedies on them to have the best measures.
Secondly, they should have good preparations to deal with the risk of trade remedies. They can have to pay up to US$500/hour for a native lawyer in each lawsuit. In the markets like the US and the EU, it is impossible to lack consultancy lawyer in the lawsuit resistance. With such an expense level, companies and associations will find it hard to mobilise the money, while, time is extremely important in lawsuit. The situation can be changed much if one day late or early.
Thirdly, Vietnamese companies have to improve their accounts in line with international account standards. I know it is difficult, but to overcome the lawsuits with the lowest costs, this is no other choice. In the lawsuits, price calculation is very significant, while inspection agencies do not accept figures that are not reported on standard accounts.
Fourthly, in the long run, firms need to carefully consider how to increase their competitiveness, from price to quality competition.
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