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From the very beginning of the trade defense lawsuit process, businesses suffer losses as their partners hesitate to sign new contracts or push for price reductions. Without proper preparation to handle these situations, businesses face substantial losses due to high tariffs on their goods, making it difficult to export.
Losses Start from the Moment the Lawsuit Is Filed
With an average annual growth rate of 13-17%, and sometimes over 20%, the Vietnamese wood industry is among the most investigated industries for trade defense measures, which is understandable.
At a roundtable discussion on ‘Combating Circumvention of Trade Defense Measures, Maintaining Sustainable Export Flows’ on November 1st, Mr. Ngô Sĩ Hoài, Vice President and General Secretary of the Vietnam Timber and Forest Products Association, shared that being investigated and having trade defense measures imposed is a real risk that the wood industry faces.
From the lawsuit initiation stage, companies are already at a disadvantage. Vietnamese businesses mainly process orders for foreign importers. When there is a lawsuit or investigation underway, they become hesitant to sign new contracts, or even use this situation as an excuse to lower prices.
As the investigation period extends over 2-3 years, companies become increasingly anxious, not knowing if their products will still be able to be exported. By the time a final ruling is made, if lucky, their products may not be taxed, but in some cases, the ruling is highly unfavorable for them.
Once the investigation and hearing process concludes, if the industry or company is subject to trade defense measures, especially increased import duties, this can significantly reduce competitiveness and result in market losses. Meanwhile, to enter and develop in the market, a company has already invested substantial financial resources. This is one of the considerable legal risks for export businesses.
Better Preparation Means Smaller Losses
According to statistics from the Ministry of Industry and Trade, Vietnamese exports have faced 257 trade defense investigations from 24 markets and territories.
These include 141 anti-dumping investigations, 37 circumvention investigations, 27 anti-subsidy investigations, and 52 safeguard investigations. The nature of these investigations is becoming more stringent, increasing the risk for Vietnamese exports.
Mr. Chu Thắng Trung, Deputy Director of the Trade Defense Department (Ministry of Industry and Trade), said that in the past, investigations focused on fraud, incorrect origin declarations, or the illegal transfer of goods from third countries to Vietnam. Such activities are often caused by one or a few companies, and if detected, the importing country will only sanction those companies.
“For example, in the investigation involving wood and wooden furniture, foreign investigators believe that Vietnamese companies are using Chinese imported components, which is seen as circumvention of trade defense measures. Or in the solar panel investigation, foreign authorities claim that FDI companies import photovoltaic cells to Vietnam for assembly and then export them to the U.S., which is also considered circumvention of trade defense measures. If companies are not proactive or provide inconsistent information, they risk facing much higher tariffs,” Mr. Trung said.
Currently, the Trade Defense Department is monitoring 300 export products from Vietnam. Along with relevant agencies both inside and outside the country, information about markets and related policies will be continuously updated to provide early warnings for authorities, industries, and businesses to take prompt countermeasures.
Source: https://doanhnhantrevietnam.vn/doanh-nghiep-mat-hang-trieu-usd-de-theo-duoi-cac-vu-kien-phong-ve-thuong-mai-d24573.html
