Reports all show that Vietnam has become a lucrative market for foreign made products. The problem is that Vietnam imports products it can make itself. This is because foreign-made products have become cheaper thanks to the free trade agreements (FTAs) to which Vietnam is a signatory.
When the tariff barriers are removed within the framework of FTAs, other countries install technical barriers and apply trade remedies to control imports. Vietnam doesn’t do this, according to Le Quoc Phuong, deputy director of the Vietnam Industry and Trade Information Center.
For food and foodstuff products, for example, the barriers set by other countries are food safety and hygiene requirements and Sanitary and Phytosanitary (SPS). As for non-food, they include Technical Barriers to Trade (TBT).
The question is why Vietnam does not apply the same measures to control imports and prevent the massive import of products that may harm domestic production.
Phuong explained that some Vietnamese enterprises may not want this. Under the World Trade Organization’s (WTO) rules, as well as other FTAs, once a country sets a regulation related to TBT, for example, the regulation must be applied to products of all origin, no matter if the products are made domestically or are imported. This means that once Vietnam requires TBT on imports, its products also have to satisfy TBT.
The more feasible solution that many other countries use, and Vietnam should also use, is technical barriers. The barriers don’t break WTO rules and they can protect consumers and domestic production.
In general, Vietnam has installed such barriers, but the barriers are still weak. Therefore, imports are still flooding Vietnam, threatening domestic production. Of course, the situation is not too serious, because 90 percent of imports are means of production, and only 10 percent are consumer goods. However, even if imports are production materials, they are also capable of killing domestic production.
In 2017, the Ministry of Industry and Trade (MOIT) established the Trade Remedies Authority of Vietnam, which was split from the Vietnam Competition Authority. The agency serves as a tool that helps protect domestic manufacturers in case imports increase suddenly and abnormally, or in case imports threaten to cause serious losses to domestic products.
The Trade Remedies Authority of Vietnam has carried out anti-dumping cases to protect domestic production, but the number of such cases remains modest, compared with the number of cases raised by other countries against Vietnamese products.
Vietnamese exports to the US, India and the EU all have faced trade remedies applied by importing countries. When Vietnam’s exports of certain products increase rapidly, such as 10-20 percent within one year, other countries carry out investigations following proposals by their enterprises.
In general, Vietnam’s trade remedy capability is still weak. Moreover, its capability of undertaking investigation, filing lawsuits, and raising trade remedies remains relatively weak.
The Trade Remedies Authority was set up several years ago. The capability of the state management agency remains limited, while the cooperation between state agencies and enterprises is not good.
Meanwhile, enterprises’ skills and spirit are not strong. When imports flood the domestic market, enterprises themselves don’t know how to do to deal with the problem. In many cases, enterprises decide not to file anti-dumping lawsuits because it is too costly. They don’t have sufficient knowledge, money and preparation for the lawsuits.
“As we have opened the doors widely, we have to improve the trade remedy capability and technical barriers. It will be dangerous if we have nothing to protect ourselves while the door is open,” he said.
Steel is an example which shows how Vietnam suffered from imports. In some periods, Vietnam imported steel in large quantities from China. China steel then was labeled with a Vietnamese brand to be exported to third countries to avoid the high tax rate imposed on China.
Weak technical barriers and low tariff barriers both pave the way for foreign products to flood the domestic market. What Vietnam needs to do is design measures on technical barriers and trade remedies to protect domestic products.
Meanwhile, enterprises themselves have to heighten their awareness and understanding about trade remedy measures to stand firmly in the market.
Luong Bang