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According to information from the Trade Remedies Authority of Vietnam and data from the World Trade Organization (WTO), the United States is currently the leading country in conducting trade remedy investigations and applying trade defense measures, particularly on exports from Vietnam.
To date, the U.S. has conducted 64 investigations, accounting for 25% of the 253 cases initiated by various countries against Vietnam. These include 28 anti-dumping cases, 11 countervailing duty cases, 22 anti-circumvention cases, and 3 safeguard cases.
Over the years, Vietnam has made efforts to strengthen its relations with the U.S. in hopes of being recognized as a market economy. However, the U.S. has continuously delayed making an official declaration on this matter.
The U.S.’s refusal to recognize Vietnam as a market economy can impact the outcomes of anti-dumping and countervailing duty investigations against Vietnam. In anti-dumping cases, due to the non-recognition of Vietnam as a market economy, the U.S. uses costs from a third country (typically Indonesia) to calculate the normal value, which often results in higher anti-dumping duties that do not accurately reflect Vietnam’s production and export situation.
The list of surrogate countries for Vietnam, as updated by the U.S., is based on two criteria: a comparable level of economic development and the presence of a significant number of producers of similar products to those under investigation. If multiple countries meet both criteria, the U.S. may select the country with the most available and reliable data. The most recent list, updated in August 2023, includes six countries: Indonesia, Jordan, Egypt, the Philippines, Morocco, and Sri Lanka.
Under the new U.S. trade remedy investigation rules effective from April 24, 2024, the Department of Commerce (DOC) will exclude countries with widespread export subsidies, those subjected to anti-dumping duties related to surrogate values, or those failing to effectively enforce issues related to intellectual property rights, human rights, labor, and environmental standards.
If no suitable surrogate value is available from a country with a comparable level of economic development, the DOC may use surrogate values from a country with a different level of economic development.
Additionally, if no surrogate country is found to be a significant producer of comparable goods to those under investigation, the DOC may use surrogate values from another country that is not a significant producer, which could lead to higher duty rates.
According to U.S. regulations, interested parties have the right to submit comments on the selection of surrogate countries and values within 30 days before the DOC issues its preliminary determination. Parties may also propose surrogate countries not included in the list for the DOC’s consideration.
This provides an opportunity for Vietnamese enterprises to propose a country and data sources that align with their production costs. In fact, many Vietnamese exporters of pangasius, warm-water shrimp, and tires have utilized this right to select appropriate surrogate countries, thereby benefiting from a 0% anti-dumping duty rate.
In countervailing duty investigations, the U.S. also uses the benchmarks from surrogate countries to calculate the subsidy margin, leading to increased countervailing duties. For example, the U.S. may use the interest rates or land rental rates from another country as a benchmark to compare with those of Vietnamese enterprises, which can result in an elevated subsidy margin.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
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