The study "Anti - dumping: A developing country perspective" by Reem Raslan 2009 gave an overall assessment of the theoretical and practical aspects of countries' anti - dumping policies
The necessity of the subject
In the era of globalization, economic integration and participation in international organizations are crucial for countries' development For developing nations like Vietnam, international economic integration is essential for bridging the developmental gap and enhancing comparative advantages in global trade Vietnam has proactively engaged in the global economy by establishing trade relations and joining various economic organizations, leading to significant growth in trade turnover and GDP contribution Joining the WTO has opened up new market opportunities for Vietnamese enterprises, particularly in the US market, which, while lucrative, poses risks due to various trade barriers, including anti-dumping measures Since the first anti-dumping investigation in 2002, Vietnamese goods have faced numerous challenges in this market, highlighting the complexities of navigating international trade.
The US has implemented significant anti-dumping measures that have impacted exporting businesses, suppliers, and workers, notably seen in the frozen filet catfish investigation of 2002 and the warm-water shrimp case in 2003 These measures pose challenges to liberalization, raising ongoing debates about the fairness and rationality of the survey results and anti-dumping actions, particularly as Vietnam has yet to be recognized by the US as a market economy Consequently, businesses must navigate these complexities in the short term.
"living together" with the risk of anti - dumping from the US An anti - dumping (AD) is a multi-dimensional issue and an effective response requires an understanding of
This article examines the implications of the United States' anti-dumping regulations on Vietnamese exports, emphasizing the importance of understanding these legal frameworks for proactive business strategies The thesis titled "The Legal System of Anti-Dumping in the United States: Insights for Vietnamese Enterprises" analyzes the U.S approach to anti-dumping measures against foreign imports and their potential impact on Vietnam's export market It also offers practical solutions for Vietnamese exporters to navigate these challenges and mitigate the adverse effects of U.S anti-dumping policies.
Literature review
Foreign studies
Dumping is a complex concept that lacks a universally accepted definition, but it generally refers to the sale of a commodity in a foreign market at prices below marginal costs Early definitions characterized it as "price discrimination between national markets," while later theories, such as cyclical dumping, suggest that uncertain future demand or domestic recession can lead to low-priced exports More recent literature identifies dumping as occurring when similar products are sold in export markets for less than in the home market or when export prices fall below total average or marginal costs This practice has been recognized as detrimental, with some experts arguing that economic definitions of dumping fail to clarify when trade restrictions are justified Ultimately, a pragmatic view defines dumping as any action that prompts government intervention under antidumping laws, and the term is increasingly associated with various unfair trade practices.
Bhala's 2002 study, "Rethinking Antidumping Law," critiques the use of anti-dumping measures, arguing that such tools are unnecessary and hinder free trade, despite their prevalence in some countries The research highlights that businesses often sell goods at lower prices to address market challenges rather than to engage in unfair competition Similarly, Reem Raslan's 2009 study, "Anti-Dumping: A Developing Country Perspective," emphasizes the increasing unfair treatment of developing nations in international trade as anti-dumping measures become more common Aradhna Aggarwal's 2007 analysis, "Antidumping Agreement and Developing Countries," examines the WTO's anti-dumping provisions, revealing the challenges faced by developing countries in compliance and enforcement Additionally, the 2001 study by Bruce A Blonigen and Thomas J Prusa identifies anti-dumping tools as significant barriers to international trade from 1975 onwards.
Since the 1980s, anti-dumping complaints have significantly increased among GATT and WTO members, surpassing all other trade lawsuits combined Annual anti-dumping cases now exceed the total from 1947 to 1970, with the majority originating from the United States, European Union, Australia, and Canada This trend indicates that some WTO member countries utilize anti-dumping lawsuits to safeguard domestic industries The motives behind these lawsuits are both economic and political, impacting both importing and exporting nations A study titled "The Use of Antidumping in Brazil, China, India, and South Africa - Swedish Rules, Trends and Causes" (2006) further explores the intricacies of anti-dumping policies.
The trend of utilizing anti-dumping tools is on the rise in developing countries, primarily due to the challenges they face with numerous anti-dumping lawsuits in export markets As a response, these nations are increasingly adopting anti-dumping measures as commercial safeguards and retaliation strategies Furthermore, the study highlights that the enhanced implementation of anti-dumping policies yields significant economic benefits for these developing countries.
The study "Policy Externalities: How US Antidumping Affects Japanese Exports to the EU" by Chad P Bown and Meredith A Crowley (2006) examines the effects of US antidumping measures on Japanese exports from 1992 to 2001 It reveals that US antidumping actions led to a significant decline in Japanese export turnover to the US, dropping by approximately one-third to one-fourth Conversely, Japanese exports to the EU increased as companies shifted focus to the EU market due to reduced opportunities in the US Additionally, Ostoni's 2005 analysis titled "Anti-Dumping Circumvention in the EU and the US: Is There a Future for Multilateral Provisions Under the WTO" explores WTO provisions and compares antidumping circumvention practices between the US and the EU.
Recent research has examined the impact of anti-dumping duties on imports, with Vandenbussche and Zanardi (2010) utilizing the gravity model to analyze bilateral trade from 1980 to 2000 Their findings reveal that anti-dumping duties significantly reduce total import volumes, although the extent of this effect varies across different industries Additionally, Besedes and Prusa (2016) employed a random effects probit model to estimate the import reduction caused by US anti-dumping duties, concluding that these duties have a more pronounced impact during the investigation and preliminary decision stages compared to the final decision stage They also noted the challenges faced by target countries in regaining their previous trade levels after the termination of anti-dumping measures.
(2016) investigated the possible effects of anti - dumping cases on import volume and unit value in the event that the European Union granted market economy status (MES)
5 to China The study used European trade and tariff data from 1988 to 2015, indicating that European import from China would increase by 3.9% to 5.3%
Lee (2009) demonstrated that anti-dumping duties have import-restricting effects by comparing their impact on target countries and import diversion effects on third countries, utilizing a random-effect GLS regression and dynamic panel data methodology based on the Helpman, Melitz, and Rubinstein (2008) model, analyzing US data from 1990 to 1996 Similarly, Park (2009) examined the effects of anti-dumping duties on imports using Chinese data from 2002 to 2004, applying the Generalized Method of Moments (GMM) estimator, and found significant trade-depressing and trade-diversion effects While many studies, including those by Besedes and Prusa (2016), Bellora and Jean (2016), and others, primarily focus on the import restriction effects of anti-dumping measures within a single country context, they often overlook the broader economic implications and fail to provide comparable results on the overall effects of anti-dumping duties.
The study "Price dynamics in the import wooden bed of the United States" by Changyou Sun (2011) studied the market of US imported wooden beds in the period of
Between 2002 and 2009, China and Vietnam emerged as leading exporters, particularly in the furniture sector A study revealed that following the U.S anti-dumping investigation of Chinese furniture imports in 2004, Vietnam began to capture a larger market share in this category The findings suggest that if the rapid growth of Vietnamese wood product exports to the U.S continues, coupled with lower export prices than those of China, Vietnam may face similar anti-dumping investigations as China did.
The "Antidumping and Countervailing Resistance in the United States" handbook, published by the Vietnam Chamber of Commerce and Industry in 2010, provides an in-depth analysis of U.S regulations regarding anti-dumping laws and countervailing duties It examines ongoing anti-dumping investigations and the actions taken by U.S authorities, while also reviewing several anti-dumping lawsuits involving Vietnamese exports This comprehensive study aims to enhance understanding of the U.S trade measures affecting Vietnamese businesses.
6 practical experiences for Vietnamese enterprises to actively deal with US anti - dumping tools
The 2012 study "Overview of Trade Defense Disputes in the European Union and the United States: Lessons for Vietnamese Exports," conducted by the Vietnam Chamber of Commerce and Industry, examines anti-dumping lawsuits and subsidies faced by Vietnam in its primary export markets, the EU and the US The study provides valuable recommendations for Vietnamese exporters to navigate and overcome potential trade barriers in these key markets.
In addition, there are many studies in Vietnam on trade barriers with each specific item of Vietnam when exporting to the US market There are few general evaluations of
US anti - dumping policies in recent years, especially in the context of fluctuations in the economic and political situation in the world and the United States
Research on anti-dumping policies has thoroughly examined the motivations behind violations and the implementation of these policies by various countries This analysis encompasses both micro-level corporate behavior and macro-level government actions It highlights the advantages and disadvantages of anti-dumping measures on the economies of both the enforcing country and the country being investigated Additionally, it evaluates the legal framework established by the World Trade Organization (WTO) concerning anti-dumping practices.
- dumping Agreement), assessing the feasibility and benefits of different economic development groups in the WTO It also pointed out the trend and shift of the use of anti
Over the past three to four decades, major economic regions have increasingly utilized dumping tools, prompting a thorough analysis of anti-dumping policies employed by countries that frequently resort to these measures This study examines various anti-dumping lawsuits, elucidating the objectives of the countries initiating these legal actions and assessing the implications for the affected parties.
From there, it is possible to comprehensively assess the impacts of the US AD policy on Vietnam's exports, which can propose solutions for businesses
Object and scope of the study
The research object of the thesis is the legal framework for anti - dumping
Country: The US and Viet Nam
Methods of research
In this thesis, we employed various research methods, including document collection and synthesis, analytical research, dialectical reasoning, and enumeration, to accurately assess and draw conclusions on the issues discussed.
Structure of the thesis
This paper is divided into three chapters as follows:
Chapter 1: An overview of anti - dumping
Chapter 2: The anti - dumping case framework
Chapter 3: Recommendations for Vietnamese exporting enterprises
Chapter one provides an overview of dumping, anti-dumping measures, and anti-dumping lawsuits, while chapter two delves into U.S anti-dumping law, offering insights into the U.S legal system The analysis of two significant cases—the catfish and shrimp cases—includes background information, procedural details, outcomes, and lessons learned Finally, chapter three summarizes key takeaways for Vietnamese businesses and offers recommendations for state agencies and associations.
Due to limited time and qualifications, this topic is definitely unavoidable We would like to receive valuable comments from lecturers
AN OVERVIEW OF ANTI - DUMPING
An overview of Anti - dumping
1.1.1 Definition of the dumping and anti - dumping
In international trade, dumping occurs when a company exports a product at a price lower than what it charges in its domestic market This practice can lead to unfair competition and may trigger anti-dumping measures from affected countries.
Dumping refers to the practice of exporting products at prices lower than their normal value in the exporting country, as defined by the WTO This practice can result in anti-dumping duties if it causes harm to the domestic industry and a causal link is established While opinions on whether dumping constitutes unfair competition vary, many governments actively combat it to protect their domestic industries.
There are many reasons can results to dumping goods We just listed some main reasons for this action below:
The government's sponsorship policy, bolstered by grants, is designed to support the entry of new industries into the market, promote the development of key sectors, and boost export levels.
Secondly, due to a big trade deficit, there must still be a foreign currency to compensate for this shortage Thus, dumping measures can be applied to solve this problem
Thirdly, resolve problems about the inventories while unable to solve under normal price mechanism
Dumping serves as a strategic competitive tool, enabling firms to dominate the domestic market of the importing country By initially underpricing their products and eliminating local competition, these companies aim to gain control over the market, ultimately maximizing their profits.
Dumping will affect to the exporting countries and importing countries in two aspects:
Dumping enables domestic exporters to broaden their market reach, boost foreign currency earnings, and reduce excess inventory, particularly for perishable goods and trendy apparel Additionally, this strategy serves as a vital instrument in a nation's foreign trade policy, aiding in the achievement of specific socio-economic development goals.
Negative: Domestic consumers have to pay the higher prices than before because of the price agreement among the businesses
Consumers now enjoy greater choices and easier access to new products, as competitive pricing becomes the norm The presence of affordable foreign goods compels domestic businesses to enhance product quality, innovate machinery, and adopt advanced technologies As a result, these improvements lead to the continuous development of products that better meet consumer needs.
Dumping goods presents significant challenges for importing countries, particularly developing nations with limited markets Consumers in these regions often receive low-quality products, counterfeit items, or goods past their expiration dates, compromising hygiene and posing serious health risks Additionally, the inability to compete with these foreign products forces many domestic businesses to halt production and, in severe cases, face bankruptcy.
Dumping is viewed as an unfair practice in international trade, prompting countries to implement anti-dumping measures to restore fair competition between domestic and imported products These measures aim to protect the domestic market from unfair competition and mitigate the harm caused to local industries by dumped goods Ultimately, the goal of anti-dumping regulations is to safeguard the interests of domestic manufacturers affected by such practices.
Although the goal of anti - dumping measures is supposed to ensure fairness in international trade, it is actually not simple like this With developing countries, they
Developed countries utilize anti-dumping measures to safeguard their emerging industries while simultaneously restricting market access for developing nations These measures serve as both a barrier to market entry and a crucial safety mechanism for protecting domestic production.
Countries have the autonomy to establish their own procedures for assessing whether imported goods are being dumped Consequently, many nations have misused anti-dumping measures to impose restrictions on imports, rather than adhering to the specific remedial objectives outlined in the WTO Anti-Dumping Agreement.
An anti-dumping duty is a protective tariff imposed by a domestic government on foreign imports believed to be priced below fair market value, which can harm the domestic industry.
A legal framework for anti - dumping activities
The GATT 1994 establishes fundamental principles governing trade among member states, including specific provisions that permit countries to impose anti-dumping duties under certain circumstances These anti-dumping measures must align with the regulations set forth by GATT and the WTO.
Article VI of GATT General Trade and Tariff Agreement (including general principles on this issue);
Anti - dumping Agreement details Article VI of GATT (on rules, conditions, order, and procedures for investigation and application of specific anti - dumping measures), including:
The regulations governing tax imposition encompass various critical aspects, including the methods for determining dumping margins, assessing injury, and establishing causal relationships between dumping and injury Additionally, these regulations outline the procedures for determining duty rates and the methods for calculating duties, ensuring a comprehensive framework for addressing trade imbalances.
- The group of regulations on investigation procedures (conditions for filing lawsuits, investigation time limit, procedural rights of parties to lawsuits, etc)
WTO member countries must ensure that their national laws align with WTO agreements, placing these regulations at the forefront of their legal systems Consequently, anti-dumping (AD) legislation often mirrors the principles outlined in the AD agreement, with many nations updating their laws upon joining the WTO Each country implements these principles through specific laws tailored to their legal frameworks While the overarching laws are generally consistent across nations, practical applications may exhibit unique characteristics Understanding the WTO anti-dumping agreements and regulations is essential for navigating these complexities.
1.2.2 Conditions for application of anti - dumping measures
Under WTO regulations, anti-dumping measures can only be enforced following a thorough investigation, contingent upon the importing country's authorities confirming the simultaneous presence of all three specified conditions.
Imported goods are dumped (with dumping margin not lower than 2%);
The manufacturing industry of like products from the importing country is likely to suffer significantly or prevent the formation of the domestic manufacturing industry (collectively referred to as "injury");
There is a causal relationship between dumping imports and the above losses;
According to World Trade Organization (WTO) regulations, importing countries are prohibited from conducting investigations or imposing anti-dumping (AD) duties if the exporting nation is classified as a developing country and its imports constitute less than 3% of the total imports of similar goods Vietnam, as a developing country, benefits from this rule However, this exemption is invalidated if the combined imports from all countries, including developed nations with similar import levels below 3%, exceed 7% of the total imports of like goods into the importing country.
"A product which is like, or in the absence of like, most similar in characteristics and uses with the article subject to an investigation"
The dumping margin can be calculated in many ways and expressed as a percentage or a specific number:
Dumping margin (%) = (normal value - export price)/ Export price
The normal price refers to the selling price of a comparable product in the exporting country’s market, which can also include the selling price of the product when exported to a third country, or it may be determined by calculating the total production costs, reasonable management expenses, sales costs, and profit margins The World Trade Organization (WTO) outlines specific criteria for utilizing each of these pricing methods.
Export price is the price on the contract between the foreign exporter and the importer (or the selling price for the first independent buyer)
Determining the injury factor is a crucial step in an anti-dumping lawsuit, as it establishes whether there has been significant harm to the domestic manufacturing industry in the importing country Only after confirming this injury can the importing country consider implementing anti-dumping measures.
In the form, these damages can exist in two forms: Actual injury or risk of injury
In terms of extent, these injuries must be at a significant level set by each country
In terms of methods, actual injury is considered on the basis of analyzing all the factors related to the situation of the domestic manufacturing industry
The process of addressing potential dumping involves a systematic approach: first, the importing country investigates the goods in question, then concludes whether dumping has occurred, and finally, if warranted, applies anti-dumping measures This procedure is initiated when there are suspicions that imported goods from a specific country are being sold at unfairly low prices, resulting in significant harm to domestic products.
Often mischaracterized as a "lawsuit," this process is actually an administrative procedure conducted by the importing country's administrative authority Its primary objective is to address trade disputes between domestic manufacturers and foreign producers, without involving the governmental relations between the exporting and importing nations.
If a party disagrees with the final decision made by the administrative authority at the conclusion of a lawsuit, they have the option to file a lawsuit in court, initiating a judicial proceeding.
1.2.5 Basic features of anti - dumping proceedings
Proceedings typically begin with a complaint or petition submitted by or on behalf of the domestic industry, which includes evidence of dumping, demonstrates the injury to the domestic industry, and establishes a causal link between the two parties involved.
Government agencies conduct investigations to ascertain if dumping is taking place, which is determined by comparing the export price to the normal value, typically reflecting the price of a similar product in the domestic market When a home market price is unavailable, the normal value can be derived from sales prices in third countries or through constructed value, calculated as the cost of production plus profit.
A determination is made of whether dumped exports have caused or threaten to cause material injury to a domestic industry producing the like product
When both dumping and injury determinations are affirmative, a definitive anti-dumping duty is enforced on future imports In the United States, this duty is assessed retrospectively, requiring imports to be accompanied by estimated cash deposit duties, with actual duties calculated annually Conversely, in the European Union, duties are applied prospectively, collected at the time of importation based on the rate established during the investigation.
Provisional measures may be imposed during the course of an investigation – after preliminary determination of dumping and injury These are usually bonds or cash deposits accompanying future imports
Investigations may be suspended or terminated if the exporter gives a price undertaking, i.e., agrees to increase its prices to eliminate the injurious effects of the dumping
There is usually a time limit on anti - dumping measures
1.2.6 An anti - dumping lawsuit steps:
An anti-dumping lawsuit can only be initiated by parties with the legal standing to do so, which includes either the domestic industry producing similar products in the importing country or a representative of that industry, as well as the authority of the importing nation.
Most anti - dumping lawsuits are actually initiated by a lawsuit filed by the domestic manufacturing industry in the importing country
In order to be considered, the claim must meet the following conditions:
Manufacturers backing the claim must ensure that their product volumes represent at least 50% of the total output from all producers who have expressed opinions regarding the complaint, whether in support or opposition.
Manufacturers that support the claim must have the like product volumes that account for at least 25% of the like products output of the entire domestic industry
THE ANTI - DUMPING CASE FRAMEWORK
The US anti - dumping legal framework
The United States has been a pioneer in implementing anti-dumping measures since 1906, with comprehensive regulations established by the Tariff Act of 1930 Key legislation, specifically Title VII of the Tariff Act, has been amended by the Uruguay Round Agreements Act, which outlines the requirements for filing an antidumping duty petition in Section 732(b) of the Act.
The authorities having direct authority in the investigation and application of anti - dumping measures include:
The US Department of Commerce (DOC) oversees the enforcement of US trade laws while promoting economic growth and job creation Within the DOC, the Import Administration Operations Unit consists of nine offices dedicated to these objectives.
- Investigate whether or not foreign goods imported into the US market are dumped and if so, what is the dumping margin;
- Issue orders to apply temporary and official defense measures;
- Conduct a massive investigation of dumping of imports during the changed in circumstances reviews, sunset reviews
The US International Trade Commission (ITC) has broad investigative responsibilities on matters of trade Specifically:
- Investigate of damage and causal relationship between damage and devaluation
- Participate in the investigation of damages in a changed circumstances review and sunset reviews process
There are two classes of the person involved in AD proceedings – those with rights to legal representation (interested parties) and others, who have no such rights
- Foreign manufacturer, producer or exporter, or the US importer or trade or business association with a majority of producers, exporters or importers of the merchandise
- Government of producing/ the exporting country
- US manufacturer, producer or wholesaler of the domestic like product
- US union or group of workers engaged in manufacturing, producing or wholesaling of the like product
- US trade or business association with majority engaged in manufacturing, producing or whole selling of the like product
Others include U.S consumers and industrial users
2.1.4 Overview of the US anti - dumping (AD) process:
An anti - dumping investigation in the United States is conducted in the following stages:
(vii) Decide to apply anti - dumping measures
Table 2.1 - The sequence of event time in an anti - dumping investigation
Period Time date for application petition 0 days
Date for initiation 20 days from petition
ITC Preliminary conclusions 45 days from petition
DOC Preliminary conclusions 140 days from initiation or maybe extended under certain circumstances
DOC final conclusion 75 days from commerce preliminary or maybe extended under certain circumstances
ITC final conclusion 45 days from commerce final
US law outlines specific deadlines for each major procedural step, along with numerous additional formal and informal deadlines regulated by the Department of Commerce (DOC) during the investigation process It is crucial for the parties involved to pay close attention to these timelines to ensure compliance and proper navigation of the legal proceedings.
The Department of Commerce (DOC) holds exclusive authority to decide on the initiation of dumping investigations, assessing whether imported products similar to U.S goods are sold at "less than fair value." In contrast, the International Trade Commission (ITC) evaluates whether the U.S industry competing with these allegedly dumped imports has suffered material injury or is at risk due to such imports.
Anti-dumping lawsuits in the United States are typically initiated by domestic producers, known as "petitioners," against foreign producers or exporters referred to as "respondents." While the Department of Commerce (DOC) has the authority to self-initiate an anti-dumping investigation, such occurrences are infrequent.
The petitioners must fill in a petition form with 5 main sections:
- Section A General information – Requires a description of the scope of the investigation (e.g., technical characteristics and use of the product, tariff classification)
Section B necessitates a detailed description of the "like product," focusing on the characteristics of both imported and domestically produced goods It highlights their similarities and the degree of market interaction between these products Additionally, this section should provide insights into the roles of exporters and importers within this context.
- Section C Solicits price information and evidence of dumping Data is required on the U.S price of the merchandise, and the estimated normal or fair value of the foreign like product
- Section D This seeks evidence of critical circumstances such as strategic dumping to offload product before duty can be applied
- Section E This is concerned with evidence of injury to domestic producers – actual or threatened
DOC and ITC receive petitions from an affected U.S industry simultaneously However, the DOC may be involved at an earlier stage, offering advice and guidance to potential petitioners
The US law mandates that the following requirements be met to initiate a case:
- There must be evidence of dumping
- There must be evidence that the U.S industry is either:
• Threatened with material injury or;
• The establishment of an industry in the US is materially retarded because of the imports
DOC's assessment of the evidence for injury may be based on:
- Declining net sales and market share
In addition, there must be evidence for an adequate level of support for the anti - dumping action:
- Petitioners and their supporters must account for at least 25% of the total volume of domestic production
- Those opposed must represent less than 50% of the output of all those expressing an opinion
In order to initiate an investigation, DOC must also determine the nature and scope of the like product, and estimate the dumping margin
The Department of Commerce (DOC) has a 20-calendar-day period to assess a petition and decide if an investigation should commence If the DOC finds sufficient grounds for an investigation, it will publish a Notice of Initiation in the Federal Register, the official government journal, along with an initiation checklist to facilitate the retrieval of relevant information regarding the petition.
The ITC investigation primarily concentrates on gathering information necessary to assess injury, the threat of injury, or material retardation as outlined in the legislation While the DOC evaluates the quality of evidence regarding injury, the ITC focuses on identifying actual material injury or the potential threat of such injury Additionally, the ITC conducts its own independent determination of like products.
In its assessment of injury, ITC will undertake a cumulative assessment of impact related to like the product from several countries
The ITC conducts extensive consultations before making determinations, issuing initial questionnaires to producers, importers, and foreign producers represented by legal counsel While responses to these questionnaires are not mandatory, failing to respond can lead to significant consequences.
A public conference in the preliminary phase allows for the presentation of arguments, followed by encouraged post-conference briefs Subsequently, a staff report is compiled, and the Commission votes on the investigation It's important to highlight that an ITC staff economist participates in the investigation, making economic arguments potentially influential during this stage.
A Preliminary Determination is issued by the Department of Commerce (DOC) within 45 days of a petition filing or 25 days after initiating an antidumping (AD) investigation In contrast, a Final Determination typically occurs within 280 days following the petition submission.
After the ITC's affirmative decision to initiate an investigation, the Department of Commerce (DOC) prepares a detailed questionnaire for mandatory respondents, specifically targeting producers and exporters of the "like product." If examining each known producer or exporter is impractical, the DOC may focus on a random sample or those companies representing the largest export volumes Companies not selected can still request to participate as voluntary respondents, but the DOC retains the authority to decide whether to consider their submissions.
The period of investigation for non - market economies (NMEs) is two most recently completed fiscal quarters prior to the month in which the petition was filed
The dumping calculation is based on a comparison of the selling price in the US and fair or normal value For market economies (MEs) normal value is based on either:
- The sale price of the same or similar product in a comparison market or
- "constructed value" based on the cost of production plus profit
In non-market economies (NMEs) like Vietnam, the normal value is determined by utilizing local production factors alongside price data, overhead costs, and profit margins sourced from a comparable market economy, such as India or Bangladesh.
The DOC questionnaire to companies (respondents) in a non - market economy is structured as follows:
Section B: Not Applicable (Comparison market sales information for an ME);
Section D: Factors - of - Production Data;
Section E: Further Manufacturing in the United States;
Non - market economy (NME) treatment:
NME treatment is specified in the Trade Act The term ‘nonmarket economy country' means:
Foreign countries identified by the administering authority as lacking market-driven cost or pricing structures result in merchandise sales that do not accurately reflect fair value.
"Any determination that a foreign country is a nonmarket economy country shall remain in effect until revoked by the administering authority"
Foreign companies involved in antidumping cases in non-market economies (NMEs) may request a separate rate to calculate their own dumping margin However, to qualify for this separate rate, these companies must legally and factually prove the absence of government control over their operations.
Anti - dumping cases between the US and Viet Nam
On June 28, 2002, the Catfish Farmers of America (CFA) submitted a petition to the ITC and DOC, claiming that certain frozen fish fillets from Vietnam were being dumped in the U.S market However, the catfish controversy began a year earlier when American catfish farmers launched a vigorous campaign against Vietnamese competition, labeling their product as a “slippery catfish wannabe” and suggesting it came from polluted waters Despite assertions from U.S congressmen regarding the questionable quality of Vietnamese catfish due to contamination concerns, these statements had minimal effect on their sales in the United States.
In 2002, American catfish farmers successfully influenced Congress to enact legislation that restricts the use of the name "catfish" to fish belonging to the Ictaluridae family, which is native exclusively to North America.
On June 28, 2002, the Catfish Farmers of America (CFA) filed a lawsuit against Vietnam in Washington DC, accusing 53 Vietnamese companies of dumping catfish in the US market In response, the Association of Seafood Exporters and Processors (VASEP) strongly denied these allegations, asserting that Vietnamese businesses adhere to stringent US trade regulations and international laws.
In the lawsuit, CFA proposed to calculate the dumping tariff:
- If Viet Nam is a market economy, the way to calculate prices must be the American style and tax rate is 144%
Vietnam is classified as a non-market economy, and when comparing its economic status to that of India, which is perceived to have a similar level of development, the applicable anti-dumping tax rate can reach as high as 191%.
- Pricing factors: alive fish prices, packaging scrap prices, packaging, labor, etc
2.2.1.2 The process of Anti - dumping investigation a Initiation
Following the review of the petition submitted by the Coalition for Fair Trade in Arms (CFA), the Department of Commerce (DOC) notified the International Trade Commission (ITC) that it was proceeding with an anti-dumping investigation based on the initial information provided by the plaintiff The ITC then issued its preliminary determination regarding the case.
On July 3, 2002, the International Trade Commission (ITC) issued a questionnaire to the Vietnam Association of Seafood Exporters and Producers (VASEP) to investigate whether catfish imported from Vietnam was being sold at prices below their true value, potentially harming American agriculture.
There, Vietnam had valid arguments to prove that it did not dump catfish into the US
They receive backing from numerous global importers and scientists, while the CFA faced challenges in substantiating their claims and expressed concerns about the resulting injuries.
On August 8, 2002, the ITC voted to conclude that the U.S catfish industry may face a threat from low-priced frozen catfish imports from Vietnam, based on preliminary survey results This finding led to the Department of Commerce's preliminary determination regarding the situation.
On December 12, 2002, the Department of Commerce (DOC) received a lawsuit and subsequently requested 53 Vietnamese enterprises to provide reports on their catfish processing and sales to the United States On the same day, relevant ministries and departments in Vietnam prepared an explanatory document advocating for the recognition of Vietnam as a market economy by the US.
- Ability to transfer free teams of VND
- Free agreement between employers and workers about wages
- The level of the Government controls with the distribution of resources and input- output prices for businesses
At the request of DOC, Vietnam would need the support from international organizations, foreign enterprises are doing business in Vietnam
On October 2, 2002, the U.S Department of Commerce (DOC) collaborated with Vietnam's Ministry of Commerce to initiate a preliminary determination regarding a lawsuit This investigation focused on the four largest export companies in Vietnam, which collectively represent 60% of the country's export products The companies under scrutiny included An Giang Fisheries Enterprise (Agrifish), Can Tho Agricultural Products Company (Cataco), Nam Viet Fish Company Limited, and Vinh Hoan Company Limited.
American experts observed that Vietnam was utilizing a market economy for goods transportation, highlighting the absence of a pure market economy The Vietnamese government clarified that it does not offer subsidies to exporters while urging the Department of Commerce (DOC) to consider an investigation into the application of anti-dumping measures.
The implementation of dumping duties on Vietnamese catfish aims to ensure adherence to U.S law and the Fair Trade principles established by the WTO, while avoiding the unreasonable protection of domestic catfish production.
On November 8, 2002, the Department of Commerce (DOC) designated Vietnam as a non-market economy, leading to the use of prices from a comparable developing country, such as India, to assess the production factors and calculate dumping margins for Vietnamese catfish products Despite this decision, the DOC failed to substantiate its claim that Vietnam's economy was less market-oriented than those of other countries recognized as market economies.
On January 27, 2003, DOC ruled that Vietnamese enterprises exported goods to the
US for dumping and suggested that the temporary tax rate for fish imported into the US was 37.94% - 63.88% d ITC and DOC Final Decision
June 16, 2003, DOC announced the final investigation results on the alleged dumping The case is transferred back to ITC
July 31, 2003, ITC announced the final investigation of alleged the US catfish processing industry that suffered physical damage
Imposing Anti - dumping duties order
In August 2003, the Department of Commerce (DOC) reinstated significant antidumping margins on Vietnamese catfish products, with rates between 36.84% and 52.90% for mandatory respondents to the investigation Producers who completed the investigation questionnaire faced a margin of 44.66%, while all other Vietnamese catfish producers and exporters were subjected to a higher margin of 63.88%.
Since then, DOC has reviewed 13 administrative tax reviews of dumping on Vietnamese catfish products imported into the United States
Table 2.2: The anti - dumping duty rates of catfish through POR
- dumping duty rate Time application
POR 12 USD/kg 0,69 2,39 2,39 01/8/2014 - 31/7/2015 POR 13 USD/kg 3,87 7,74 2,39 1/8/2015 – 31/7/2016
On March 15, 2018, the US Department of Commerce concluded the 13th administrative review of anti-dumping measures, covering the period from August 1, 2015, to July 31, 2016 As a result, Vietnamese catfish exporters will face anti-dumping duties ranging from $2.39 to $7.74 per kilogram These significant tax rates are expected to greatly affect Vietnam's catfish exports to the United States.
Lesson learned
The catfish case has led to an unexpected boost for VASEP, as the imposition of antidumping duties by the DOC has resulted in a significant increase in catfish exports to markets such as the EU, Japan, and Australia Additionally, Vietnamese consumers have begun to embrace catfish, driven by heightened media coverage that raised awareness about the product This situation highlights that merely offering good quality and low prices is insufficient for successful entry into foreign markets; a strong brand presence and effective marketing strategies are essential.
2.3.2 Understand the international legal system
After nearly a decade of pursuing the catfish lawsuit, the Vietnam Association of Seafood Exporters and Processors (VASEP) and seafood exporters have realized the critical importance of understanding international law.
In the past, seafood companies faced challenges due to unexpected dumping lawsuits; however, many have since taken proactive measures by enhancing their understanding of international trade law, particularly anti-dumping regulations To strengthen their legal positions, numerous businesses have even engaged foreign lawyers for litigation support.
A timeless lesson for Vietnamese exporters is the importance of market diversification Often, businesses become fixated on a single export market once they identify a suitable one, neglecting the potential risks involved This narrow focus can lead to significant challenges, as their product output becomes overly reliant on one country.
2.3.3 Take advantage of the power of association
The shrimp and catfish lawsuits have led to the establishment of a strong industry association in Vietnam's fisheries sector Drawing from international experiences, it is essential to strengthen the association's role to effectively address challenges and enhance export promotion.
The Association will serve as a legal entity that establishes member conduct and safeguards businesses during disputes By collaborating through the association, enterprises can collectively assess strategies to enhance profits while mitigating unfair competition among members, thereby reducing the risk of legal actions that could threaten the entire industry.
The association serves as a vital support network for businesses, offering expertise and skills while facilitating information sharing among enterprises Additionally, it plays a crucial role in developing early warning mechanisms and establishing systems that encourage businesses to pursue legal action when necessary.
In particular, the smooth coordination among businesses, associations and the state in dumping cases is a key to reach success
2.3.4 Develop an early warning mechanism
Time plays a crucial role in the effectiveness of respondents during antidumping actions The cases of catfish and shrimp illustrate that allowing more preparation time significantly enhances the quality of responses in antidumping investigations.
An effective early warning mechanism, though not universally applicable across all industries, can incorporate several key elements: conducting thorough economic analysis, closely monitoring the activities of domestic producers, establishing a network of connections with lobbying firms and law firms internationally, and keeping a vigilant eye on media coverage.
An effective economic analysis of Vietnamese exports must consider both the current export landscape and the domestic industry of the importing country A sudden surge in market share may trigger antidumping actions, particularly in markets heavily influenced by foreign imports, which can motivate local producers to initiate antidumping petitions Additionally, a decline in market share, even if caused by factors such as reduced government subsidies, outdated technology, or natural disasters, can lead domestic producers to seek antidumping measures Political factors, such as upcoming elections where politicians rely on voter support, can further incentivize domestic producers to file these petitions.
Vietnamese enterprises can effectively detect potential anti-dumping activities by closely monitoring the actions of domestic producers Prior to filing an anti-dumping petition with the relevant authorities, these producers should collaborate to secure funding, engage legal counsel, and gather necessary information for their case Typically, these activities are public, allowing Vietnamese exporters to stay informed In situations where exporters lack representation abroad, monitoring media outlets becomes a crucial strategy for preparedness.
Networking with law firms and lobbying firms offers Vietnamese enterprises valuable insights into their services and operations In exchange, these firms can inform Vietnamese businesses about potential anti-dumping actions, helping them stay informed and prepared.
RECOMMENDATIONS FOR
Recommendations for Vietnamese enterprises
3.1.1 Recommendations to limit anti - dumping lawsuits
Establishing a reasonable pricing policy is crucial, especially in the context of anti-dumping lawsuits, which often arise from pricing issues Crafting such a policy is complex and must be tailored to the specific business environment and the exporter's circumstances Nevertheless, an effective pricing strategy should adhere to several key criteria to ensure compliance and competitiveness.
- Ensure the consistency of prices among different exporting markets, between exporting and domestic markets
- Ensure the competitiveness of domestic companies in the importing countries with the exporting companies to avoid pushing prices down
To enhance export prices, it is essential for businesses to adapt to market regulations and establish reasonable export floor prices that reflect product quality and value VASEP encourages companies to prioritize quality over price competition, advocating for the implementation of export floor pricing as a viable solution Despite previous attempts to set floor prices with enterprise agreement, lack of government support and enforcement hindered these efforts For effective enforcement of export floor prices, the Ministry of Agriculture and Rural Development must issue an official directive to collaborate with customs, ensuring that shipments below the established floor price are not cleared.
When domestic producers' competitiveness is weakened and their market share is shrunk, they can use any ways possible to obstruct competing foreign imports
Antidumping measures are a key strategy for domestic producers seeking to protect their interests against foreign competition These producers often hold significant advantages over foreign entities when it comes to lobbying efforts, primarily due to their understanding of local political dynamics and their established relationships within the legislative branch.
In large countries like the United States, political dynamics often emphasize a "local focus," which influences public relations and networking within the home country This environment creates greater opportunities for domestic producers to hinder foreign imports rather than the other way around For Vietnamese enterprises, diversifying export markets is essential to mitigate negative impacts when access to a specific market is restricted.
3.1.1.3 Complete accounting and bookkeeping regimes according to international standards
As our country has joined the WTO, it is essential for cost accounting and accounting processes to adhere to international standards Currently, the bookkeeping and accounting practices of Vietnamese enterprises are often inconsistent with these standards, resulting in unclear accounting data This lack of clarity can hinder investigation agencies from accepting reported costs, complicating the determination of dumping margins for businesses To address these challenges, enterprises must implement effective solutions.
Under Vietnam's current accounting system, there is no specific category for attorneys' fees, which poses challenges for businesses facing dumping lawsuits Most companies are compelled to hire reputable international lawyers specializing in anti-dumping cases, resulting in substantial legal expenses These costs are legitimate and should be recognized in financial statements, aligning with international accounting standards Additionally, businesses must ensure that their accounting practices are transparent and that all cost documentation is accurate to comply with these standards.
Vietnamese enterprises must enhance their understanding of the international accounting process by training accountants in international accounting standards Improving management skills and ensuring accurate documentation in line with these standards is essential Additionally, it is crucial to maintain clear accounting data, including details on selling prices, sales quantities, sale dates, shipping costs, and pricing.
43 adjustment is the part that must have the clearest data Information about production costs and other costs must be separated
To enhance self-protection, businesses must invest in a transparent international information system that is independently verified according to global standards This robust system not only serves as compelling evidence in legal matters but also streamlines business management, ultimately saving time and reducing costs associated with litigation.
3.1.1.4 Strengthen the human resources of enterprises on anti - dumping
To effectively address this issue, enterprises should prioritize staff training initiatives It is essential for the personnel responsible for the company's strategy to possess a solid understanding of the usage conditions and business requirements Training can be conducted directly by professional organizations or through self-directed learning using recordings and training videos provided by these organizations.
3.1.1.5 Improve knowledge of WTO anti - dumping laws as well as US anti - dumping laws
Seafood processing enterprises must learn more to improve knowledge of WTO and
To effectively address US anti-dumping laws, it is essential to develop a pool of experts well-versed in international trade regulations This can be achieved by inviting qualified professionals, including foreign specialists, to provide targeted training for business managers and skilled lawyers Establishing dedicated organizations to handle foreign trade disputes is crucial, comprising a team of lawyers, accountants, economists, and industry specialists This collaborative approach will enable businesses to receive informed advice and support the government during anti-dumping lawsuits.
3.1.2 Recommendations when enterprises are sued
The rising trend of trade defense lawsuits is becoming increasingly prevalent, affecting not only Vietnam but also numerous exporting nations As a result, businesses must prioritize preparation strategies to effectively navigate and succeed in the face of potential trade defense litigation.
3.1.2.1 Participate fully and cooperate under the advice of experts
Businesses must actively cooperate with investigating agencies during the investigation process by providing necessary information If a foreign exporter fails to engage and does not respond to the US International Trade Commission's (USITC) questionnaire, the Department of Commerce (DOC) will resort to available data to determine dumping rates This reliance on accessible information can negatively impact the defendant, as it may not accurately represent the situation and is often skewed in favor of the plaintiff.
Navigating the requirements set by the Department of Commerce (DOC) can be complex, making it essential for businesses to seek expert guidance Understanding how to accurately respond to inquiries and assess the DOC's information verification process is crucial to prevent errors that could result in anti-dumping duties.
In the United States, parties involved in an anti-dumping lawsuit are not legally required to have attorneys represent them, allowing foreign businesses the option to litigate independently However, the complexities of the anti-dumping investigation process and the intricate methods of economic calculation make it nearly impossible for foreign exporters to navigate these challenges effectively without the guidance of legal experts.
3.1.2.3 Reach the victory in the initial investigation phase
To successfully win a dumping case, American producers must seize every opportunity from the outset and demonstrate two key elements: first, they must establish the existence of a significant dumping rate as determined by the Department of Commerce (DOC).
Proof of physical injury or material injury to USITC
Recommendations for the Government
To effectively educate businesses and managers on anti-dumping laws and trade dispute mechanisms, it is essential to conduct informative activities Additionally, offering technical assistance and training in international trade law will further empower enterprises to navigate these regulations successfully.
To effectively assist businesses in navigating the lawsuit process, particularly in international trade disputes, it is essential to establish a robust support system that includes information, technology, and consulting services Additionally, the state can create a dedicated fund aimed at providing financial assistance to businesses engaged in these legal challenges.
Thirdly, with its information network, the Government can completely set up an early warning mechanism for possible trade disputes to help businesses and associations have more time to prepare
To enhance the effectiveness of the early warning system, authorities should assist business associations by supplying macroeconomic data and facilitating information collection through their networks For instance, the Ministry of Trade can leverage its network of commercial attaches to aid Vietnamese exporters in obtaining valuable insights about their export markets.
Furthermore, the authorities, through their connections abroad, may communicate with foreign antidumping authority to convince them to use fair and reasonable procedures in hearing the cases
The Vietnamese authorities play a crucial role in determining whether Vietnam is classified as a non-market economy in future anti-dumping cases To enhance its global economic integration, the government must accelerate economic reforms while ensuring minimal interference from state agencies in business operations Without recognition as a market economy, Vietnamese exporters may encounter significant disadvantages, as petitioners could select a third country for price comparisons, leading to the loss of competitive advantages and potentially inflated dumping margins.
In addition, although there are other state agencies which don't have direct authority or function in the anti - dumping investigations, they indirectly related to these investigations
For example, the Customs Office directly provides information and import data for the
AD investigation (volume, quantity, import price and import progress) to the enterprise For these agencies, the support can be implemented in the form of:
Simplify and reform administrative procedures related to meeting the requirements of enterprises associated with anti - dumping targets;
Coordinate effectively and promptly with the investigating agency in providing information for the investigation.
Recommendations for Ministry of Industry and Trade
Ministry of Industry and Trade can support enterprises to sue through the following forms:
The establishment of a consultant group, including officials from the Vietnam Competition Authority (VCA), aims to assist businesses in reviewing the proposed draft lawsuit This initiative is designed to bolster the confidence of the plaintiff enterprises in their legal proceedings.
48 that the contents of the petition and accompanying documents have ensured the requirement
In situations where enterprises are restricted from accessing essential information, the intervention of the VCA (Vietnam Customs Authority) becomes crucial for indirectly obtaining necessary data For instance, upon request from a proposed enterprise group, the VCA can solicit the customs office for information related to the export of specific products, ensuring that the identity of the requesting enterprise remains confidential This approach serves as an effective means for businesses to gather vital information that can support their legal cases.
VCA offers essential support and guidance to Vietnamese enterprises in information verification, helping them gather effective evidence for investigations This assistance is particularly valuable for businesses lacking prior experience in this area, ensuring they can navigate the process successfully.
Recommendations for Business associations
Business associations play a crucial role in managing antidumping cases by coordinating all related activities They serve as industry watchdogs, overseeing early warning mechanisms before an antidumping case arises Additionally, these associations organize training sessions for their members to effectively respond to investigations and cultivate a network of connections in countries facing potential antidumping actions.
Thus, each business association needs to set up a task force responsible for preparing for possible AD action The main functions of this task force would be:
Evaluate the risk that their products may be subjected to AD actions abroad;
Study AD laws of the major export markets of the association;
Collaborate with legal and economic experts specializing in antidumping (AD) to analyze case precedents in vulnerable markets This approach will help uncover the strategies and tactics employed by domestic industries to challenge foreign products, as well as provide insights into the perspectives of AD regulatory authorities.
Work with the association member enterprises to improve their accounting and recording standard to meet the requirements of AD investigation;
Draw a plan to coordinate the association member enterprises in case of being attacked by AD actions;
Preparing for an antidumping action requires significant financial resources, and while the respondents bear the costs, it is crucial to centralize financial management A business association is ideally positioned to oversee these resources, as it plays a key role in coordinating the preparation and defense efforts.
To enhance the effectiveness of lobbying efforts, it is essential to develop a strategic approach with clear objectives aimed at influencing the executive branch While direct lobbying may have limited impact, it can effectively encourage the anti-dumping authority to adopt fair and reasonable investigative procedures Successful lobbying requires robust evidence and well-defined goals, rather than relying solely on appealing to common sense Additionally, fostering collaboration with media outlets and organizations that share mutual interests in the anti-dumping country can significantly strengthen lobbying initiatives.
- governmental organizations are important in winning the support from the public
In summary, this article provides an overview of dumping and the circumstances under which countries implement anti-dumping measures, with a focus on the U.S legal process for antidumping lawsuits It specifically examines ongoing U.S anti-dumping cases against Vietnam, highlighting the implications for Vietnamese exports To effectively navigate U.S anti-dumping policies, Vietnamese businesses must first understand the concepts of dumping and WTO regulations, followed by a targeted analysis of the anti-dumping policies in their export markets Learning from past U.S lawsuits, particularly in the catfish and shrimp industries, is crucial for Vietnamese enterprises to enhance their international business acumen While the catfish case continues to face unfavorable tariffs, the shrimp industry shows promise due to the collective efforts of Vietnamese businesses and associations For Vietnam to thrive in the competitive U.S market, a collaborative approach involving government support and industry associations is essential to strengthen the nation's position in global trade.
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