According to the Department of Trade Defense, Ministry of Industry and Trade, by the end of 2024, Vietnam’s export goods had faced about 273 trade defense investigations from 25 import markets.
In particular, in recent years, there have been a number of new markets that have investigated Vietnamese products for the first time, such as the Mexican market, which began investigating in 2021 when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect. In 2024, the South African market conducted a trade defense investigation against us for the first time.
In 2024 alone, the number of new trade defense cases initiated by foreign countries was 29 cases. According to Ms. Nguyen Yen Ngoc, Head of the Foreign Trade Defense Handling Department, Trade Defense Department, this is the second highest number in history and only lower than 2020 (39 cases). The new investigation numbers in 2024 have doubled compared to 2023. This shows that the trend of trade defense investigations may increase in the coming time.
Ms. Ngoc commented that there is one thing that is particularly noteworthy: if in the past, only goods with large export turnover or industrial goods with strong competitiveness with other countries were at risk of being investigated for trade defense, in 2024, the trend is that goods with low and small export turnover will also be investigated for trade defense. Thus, Vietnamese small and medium enterprises also need to pay close attention.
The United States is one of the WTO member countries that has applied the most trade defense investigation measures to Vietnamese export goods. According to statistics, the United States has currently applied and initiated investigations into 70 cases.
DIVERSITY OF INVESTIGATED PRODUCTS
Since the beginning of 2024, the United States has launched 10 trade defense cases against Vietnamese goods. The investigated goods are also very diverse, from agricultural products to industrial goods. From goods with large export turnover to goods with very modest export turnover (such as paper bags), even goods with turnover of only about 11 million USD.
Mr. Do Ngoc Hung, Commercial Counselor, Head of the Vietnam Trade Office in the United States, said that the United States has increased dual investigations on both dumping and subsidies. The US agency always applies new legal changes to trade defense investigations, causing more and more difficulties for Vietnamese export enterprises.
For example, recently, US investigative agencies have applied cross-border subsidy calculations as well as regulations related to labor and environmental issues. The obvious reason is that the US trade deficit is very large, thus directly affecting competition for businesses as well as domestic manufacturing industries in the US.
Not only in the US, in other markets, Vietnamese export goods have gradually dominated the market, with competitive prices, putting great pressure on domestic manufacturing industries of importing countries.
In the US, this country’s tariff measures have caused changes in the supply chain. Therefore, with the China +1 policy, many businesses as well as production facilities have shifted their investments, diversified their supply chains and moved to countries in the region, including Vietnam.
COMPETE WITH QUALITY INSTEAD OF PRICE
To overcome trade defense barriers, Ms. Ngoc noted that businesses that intend to export a product to a certain market need to carefully study the market’s regulations. This can be done through research or through trade offices, while ensuring compliance with the regulations of the host country. In particular, avoid acts that are considered to be aiding and abetting evasion or origin fraud, as these acts will be severely punished.
“Businesses need to carefully study the trade defense investigation procedures with these countries, to anticipate risks and can also participate in training sessions organized by departments, branches, and the Ministry of Industry and Trade (Trade Defense Department) to equip themselves with more knowledge before the incident occurs to avoid being surprised,” Ms. Ngoc recommended.
At the same time, Ms. Ngoc said that the Trade Defense Department has regularly updated the warning list of goods at risk of being investigated for trade defense and anti-trade defense evasion on the Department’s website and the Ministry of Industry and Trade’s website as well as sent to departments, branches, and associations. Relevant businesses can refer to this list to have appropriate production and business plans.
In addition, businesses can also find information through their import partners, who will be the ones to get the information relatively early. In addition, businesses should diversify their export markets as well as diversify their export products to avoid losing the market when an incident occurs, as well as not being able to export other products and needing a lot of time to switch.
On the other hand, businesses should compete on quality, instead of competing on price, because if we keep reducing prices, we may be investigated for anti-dumping. According to Ms. Ngoc, departments, branches, sectors and government agencies must review and avoid issuing policies that could be considered subsidies. For businesses, it is necessary to increase the localization rate; use Vietnamese raw materials or use imported raw materials from countries that are not subject to trade defense investigations to avoid the risk of being investigated for tax evasion in the future.
In particular, businesses need to store accounting books and have a traceability system to be able to present supporting documents in investigation cases. “For example, the United States requires keeping documents for at least 5 years in anti-avoidance investigations. Even in subsidy cases, they investigate according to the product life cycle, some cases are up to 15 years, which means we must present relevant documents for 15 years, so we pay close attention to this issue,” Ms. Ngoc emphasized.
In the event that an incident has occurred, businesses should not be pessimistic. Of course, when an incident occurs, we will be greatly affected, but active participation can bring many benefits. Even for some businesses, when an incident occurs, if we actively participate at a lower tax rate or a more competitive tax rate than our competitors under investigation, then after the conclusion of the incident, we will have a comparative advantage over other countries and our exports will even be better. For example, the tire industry has witnessed such cases.
“When an incident occurs, businesses must first immediately arrange resources and personnel and consider whether it is necessary to hire a lawyer. At the same time, businesses need to monitor and fully comply with all requirements of the investigating agency regarding techniques, procedures, and deadlines,” Ms. Ngoc recommended; At the same time, Ms. Ngoc emphasized: during the entire process of the incident, it is necessary to closely coordinate with the Department of Trade Defense, the focal point of Vietnam related to trade defense, to receive timely advice and support. All of these factors will lead to whether our results are good or not.
Agreeing, Mr. Vu Thanh Hai, expert of the Institute of Energy (Ministry of Industry and Trade), recommended that Vietnamese enterprises need to promote the localization of their products, always improve products to enhance the competitiveness of products. It is necessary to innovate the management model or control the quality of products, especially export products. It is necessary to diversify markets and export products, avoiding dependence on certain markets.
