Wood businesses suffer huge losses when being targeted by trade defense investigations

Wood exporting enterprises will suffer huge losses as soon as they are put on the trade defense investigation list by the export market. Therefore, improving response capacity as well as strengthening early warning by authorities are important factors for the sustainable export of Vietnamese wood and wood products. Mr. Ngo Sy Hoai - Vice President and General Secretary of the Vietnam Timber and Forest Products Association shared with reporters of the Industry and Trade Newspaper about this issue.

With the trade defense investigation, Vietnamese wood enterprises are facing risks and great losses. Photo: VNA

The United States is currently one of Vietnam’s leading export markets for wood and wood products. However, this is also a market that regularly initiates trade defense investigations into wood products. Could you please elaborate on this issue?

To date, the United States is the market consuming 50-55% of the total wood products exported from Vietnam to the world. This shows that the United States is a decisive market for the annual growth of Vietnamese wood and wood products.

However, due to the trade conflict between the United States and China, Vietnamese wood and wood products exported to the US market have recently been closely examined to ensure that Vietnamese goods do not violate regulations on anti-tax evasion in trade defense markets.

Recently, the wood industry has faced three notable trade defense lawsuits from the US market. In particular, the US initiated an investigation into hardwood plywood for allegedly violating anti-tax evasion regulations. After a very long investigation period, 37 Vietnamese enterprises were blacklisted, almost losing their market, unable to export plywood to the US market.

In addition, the investigation into wooden kitchen cabinets, dressing tables and accessories was initiated by the United States in 2022. Recently, the United States also made a final decision allowing exporting enterprises and the US market to enjoy the self-certification mechanism.

However, recently, the US Joint Litigation Team is also continuing to file a lawsuit, requesting to continue the investigation and not to recognize the final decision of the US Department of Commerce (DOC). Therefore, the Association and businesses are having to monitor, be careful and fully meet the self-certification requirements that DOC has prescribed for products exported to the US.

Mr. Ngo Sy Hoai - Vice President and General Secretary of Vietnam Timber and Forest Products Association

In the face of market investigations, what do you think about the risks and damages to businesses, as well as the improved response capacity of businesses after the investigations?

Normally, before the trade defense investigation from the US market, Vietnamese wood enterprises face very high risks because most of them are small and medium enterprises, only focusing on production, producing according to foreign designs to ensure delivery progress.

On the other hand, as soon as the market initiated an investigation, businesses were already facing risks. Because foreign importers were afraid of getting into trouble and did not know the results of the investigation, they considered stopping imports. As a result, Vietnamese businesses were forced to stop production, workers were left without jobs, etc.

In addition, during the investigation process, such as anti-tax evasion investigations, foreign investigation agencies provide many questionnaires and data that businesses must answer. In reality, our businesses do not violate the law, but due to lack of understanding of the law, they make incorrect and inconsistent declarations, so they are often blacklisted for trade defense investigations.

Recently, the frequency of anti-dumping lawsuits and investigations and anti-trade defense tax evasion cases has increased. Therefore, we are very concerned that if businesses do not focus on improving their response capacity, it will seriously affect the export situation of wood and wood products to markets, especially the United States.

So what specific recommendations do you have for businesses in the industry in the context of markets, especially the United States, stepping up the application of trade defense measures?

We always recommend that businesses, along with investing in production lines, raw materials, expanding production, and creating competitive value, pay special attention to improving trade defense capacity. Specifically, increase investment and apply modern accounting software so that when the market initiates an investigation, businesses can provide specific evidence to ensure the legality of the product. This will help businesses avoid having their goods' output blocked.

In the future, the protectionist trend is forecast to continue to be strengthened, along with environmental barriers, green production, and zero emissions, which are increasingly urgent challenges for the export activities of Vietnamese wood industry enterprises. Therefore, enterprises must pay special attention, assign and organize specialized departments to carry out this work, in order to ensure production and business activities for enterprises.

On the Association’s side, we have been trying to connect businesses so that not just one but many businesses need to proactively join forces to ensure compliance with market conditions. Because, if one business does not ensure accountability and proof of production materials, many businesses may be implicated. Therefore, when we are ready to prepare resources to respond when pushed to the wall, we will have enough capacity to overcome.

Along with that, in your opinion, how should the competent authorities in charge of trade defense as well as the Vietnamese Trade Offices abroad continue to support wood enterprises in responding to trade defense investigations from export markets?

To help prevent damage, the Vietnam Timber and Forest Products Association and the Department of Trade Remedies, Ministry of Industry and Trade regularly organize training courses for businesses and businesses have also actively participated, thereby increasing response capacity.

In particular, in lawsuits and investigations, the Trade Defense Department has provided guidance to the Vietnam Timber and Forest Products Association and businesses in responding poorly to the investigation agency, in which the stages of consistent declaration, explanation, and evidence proving no violations are being done very well. In addition to training courses on trade defense skills for businesses, when an incident occurs, the Trade Defense Department has actively guided businesses to make timely explanations and declarations according to market requirements.

The signing of Free Trade Agreements (FTAs), many of which have large market sizes, opens up opportunities for Vietnamese goods to be exported, while we have to face the increasing trend of protectionism and the application of trade defense measures. Therefore, businesses are being extremely cautious to avoid losses and legal troubles from outside. Accordingly, along with the efforts of businesses, I think that early warning from management agencies is very important.

Recently, the work of warning products at risk of being investigated and applying trade defense measures has been of interest and focus to the Trade Defense Department, as well as Vietnamese Trade Offices abroad. And we highly appreciate the efforts of the units of the Ministry of Industry and Trade in the work of early warning of trade defense, thereby helping to minimize damage to wood enterprises as well as the industry.

In the future, the Vietnam Timber and Forest Products Association and wood enterprises hope that this work will continue to receive attention and promotion, contributing to protecting interests and ensuring export activities for wood and wood products of Vietnam.

Thank you!

Source: https://congthuong.vn/doanh-nghiep-go-thiet-hai-lon-khi-bi-vao-tam-ngam-dieu-tra-phong-ve-thuong-mai-354290.html