Trade Defense: The Key to Success for Vietnamese Businesses

The application of trade defense measures has helped the steel industry regain its position and grow. Illustration photo: HP

Recovery thanks to trade defense tools

Sharing about the story of trade defense in the steel industry recently, Mr. Dinh Quoc Thai, General Secretary of the Vietnam Steel Association, said that the global overcapacity situation has caused competitive pressure in the industry to be very high.

Accordingly, many Chinese steel manufacturers sought to clear their inventories by exporting at very low prices to Vietnam. At one point, Chinese steel accounted for 62% of the total steel imported into Vietnam. This caused many Vietnamese steel enterprises to face the risk of loss and bankruptcy.

However, the Vietnamese steel industry quickly "turned the tables" thanks to the support of the Trade Defense Department (Ministry of Industry and Trade) to initiate many anti-dumping lawsuits and impose trade defense taxes.

From 2020 to present, the Vietnamese steel industry has initiated 12 lawsuits related to stainless steel products, color-coated steel, steel billets, H-shaped steel, cold-rolled steel, etc.

Mr. Dinh Quoc Thai said that after applying trade defense measures, Vietnamese steel enterprises have regained their competitive advantage in price and maintained their market share.

Thanks to that, the revenue and profit of the enterprise improved significantly, ensuring jobs for employees as well as fulfilling tax obligations to the State.

“From a manufacturing sector dependent on imports as well as foreign technology and techniques, since 2017, Vietnam's steel industry has entered the world's Top 19 and is currently in the world's Top 12.

The production systems of Vietnamese steel enterprises have been invested in depth, improving production capacity, ensuring the highest standards of quality and environment to meet the increasing demands of the domestic and export markets.

Enterprises also invest in modern production systems and research to expand many new products with high added value," Mr. Dinh Quoc Thai informed.

Similar to the steel industry, Mr. Tran Vinh Chung, General Secretary of the Vietnam Sugarcane and Sugar Association, said that in 2020, the Vietnamese sugar industry almost fell into the loss-making situation when cheap sugar from Thailand flooded the market.

Based on the request of the Vietnam Sugarcane and Sugar Association, the Ministry of Industry and Trade has conducted an investigation and applied anti-dumping and anti-subsidy measures on sugar products originating from Thailand; followed by applying anti-circumvention measures on sugar products from five countries: Laos, Cambodia, Indonesia, Malaysia and Myanmar.

Vietnam’s sugar industry has recovered thanks to the above-mentioned trade defense measures. As a result, domestic sugar production has continuously increased, and sugarcane productivity has also improved significantly, reaching 6.8 tons of sugar/ha in the 2023-2024 crop year - the highest level in ASEAN.

In particular, sugarcane farmers also benefited when the price of sugarcane in the 2023-2024 crop year increased by 152% compared to the 2020-2021 crop year.

Currently, the domestic price of sugarcane is equivalent to USD 55 /ton, higher than the 38.9 USD/ton in Thailand. The increase in sugarcane prices also helps to keep farmers attached to sugarcane, and the planting area is expanded.

Confidently step into the international market

In addition to protecting domestic manufacturing industries at home, the effective use of trade defense tools has also helped Vietnamese goods gain a foothold in export markets.

By the end of September 2024, Vietnam had faced 263 trade defense cases initiated by other countries. Although the number of foreign trade defense investigations into Vietnamese exports has tended to increase, thanks to the initiative of enterprises and the active support of the Ministry of Industry and Trade, many cases have achieved positive results such as enterprises not being taxed or being taxed at a low level, thereby continuing to maintain export markets.

Seafood is an industry that has had experience in trade defense in export markets very early. Since 2002, the United States has conducted investigations into Vietnamese pangasius, followed by shrimp in 2003.

Although these measures have been extended for 22 years, over time, Vietnamese enterprises have become more experienced and the annual review has achieved positive results. Currently, large enterprises enjoy 0% tax and the seafood industry still maintains exports.

In particular, the US Department of Commerce has not recognized Vietnam as a market economy, so in anti-dumping lawsuits, Vietnam will have to use the "replacement value" of a third country to calculate the dumping margin.

Over the years, the United States has repeatedly changed the country chosen as a reference in the anti-dumping case against Vietnamese seafood. Specifically, in the two cases involving tra fish and shrimp, the United States initially designated Bangladesh as a substitute country to determine the dumping margin.

After a while, Vietnam's GDP per capita increased, so the replacement country was forced to switch to India. Then, Vietnam's GDP per capita surpassed India's, so the replacement country had to change to Indonesia again.

Sharing his experience in this matter, Mr. Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that it is important for businesses to have a strategy when pursuing foreign lawsuits, especially during administrative review periods.

In the wood industry, when the US investigated plywood in 2020, due to lack of experience, some businesses did not fully participate and cooperate, leading to unfavorable results. Specifically, 37 businesses were put on the tax list.

However, by the second time the US investigated in 2022, wood industry enterprises had gained a lot of experience, most of them were assessed as not being investigated and enjoyed an exemption mechanism for this case.

Mr. Cao Xuan Thanh, Chief of Office of the Vietnam Timber and Forest Products Association, said that the initiative of enterprises plays a very important role. Enterprises need to assess risks early to have appropriate business strategies and plans.

During the process of handling the case, businesses need to cooperate and provide complete, accurate and consistent data to the investigation agency.

Effectively responding to trade defense lawsuits from other countries has helped Vietnamese enterprises maintain their competitive advantage, stand firm and develop in export markets.

According to VASEP, as of September 15, shrimp exports to the US reached USD 516 million, up 8% over the same period in 2023; pangasius exports to the US reached USD 240 million, up 23%. Similarly, wood and wood product exports to the US also recorded an increase of nearly 26%, reaching USD 6.5 billion.