Calculating dumping margin service in Vietnam

The free trade of goods and products between countries is currently taking place around the world and has become stronger after the creation of the WTO. WTO creates a fair trade market for countries around the world to participate in based on transparent legal barriers for fair development. In WTO regulations, there are particularly important regulations such as the General Agreement on Tariffs and Trade (GATT) and the Anti-Dumping Agreement (ADA) to guide countries in determining and implementing an anti-dumping tax on goods and products intentionally dumped by traders from other countries to sabotage the economies of other countries.

Legal basis

• General Agreement on Tariffs and Trade (GATT);
• Anti-Dumping Agreement (ADA);
• Law on Foreign Trade Management 2017;
• Law on Export Tax and Import Tax 2016;
• Decree No. 10/2018/ND-CP detailing several articles of the Law on Foreign Trade Management on trade defense measures;
• Circular 37/2019/TT-BCT details several contents on trade defense measures, amended and supplemented in Circular 42/2023/TT-BCT.

What is anti-dumping and anti-dumping margin?

According to the general understanding of international trade activities, anti-dumping activities are understood as (1) there are dumping activities by individuals and organizations and (2) there are anti-dumping activities by the government.

• Anti-dumping activities as defined in Clause 1, Article VI of the General Agreement on Tariffs and Trade (GATT) and Clause 2.1, Article 2 of the Anti-Dumping Agreement (ADA) are understood as the sale of goods and products of a country A is introduced into the commerce of country B at less than the normal value of the products in this market and the consequences of the activity causes or threatens material injury to an established industry in country B.
• Anti-dumping activities is the activity of country B in carrying out necessary activities to protect domestic industry, the measures taken by government B will depend on the Trade Agreements that they are participating in, but almost all countries in the world take the most basic measure of taxation. Tax rates, rates, and margins will depend on each country.
• In Vietnam, anti-dumping measures are prescribed in Article 77.3 of the Law on Foreign Trade Management 2017, including:
• The anti-dumping tax;
• Commitment to anti-dumping measures by organizations and individuals producing and exporting goods that are required to apply anti-dumping measures with the Vietnam Investigation Agency or with the manufacturers domestically if approved by the Investigation Agency.
• The dumping margin mentioned in Article 2.2 of the ADA is mentioned as if there are no sales of the like product in the ordinary course, “[…] the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and profits”. Article 5.8 also stipulates that the normal minimum (de minimis) margin to constitute a violation must not be less than 2% of the export price.

Regulations on dumping margin in Vietnam

Dumping margin in Vietnam: Inheriting and implementing GATT regulations, Vietnam applies a maximum dumping margin to maximize protection for domestic production. In Vietnam, an anti-dumping tax is applied to imported goods and products with a dumping margin of 2% or more of the export price to Vietnam.

Principles of application:

• Only applied to a necessary and reasonable extent to prevent or limit significant damage;
• Being conducted after an investigation and must be based on the investigation conclusions according to the provisions of law;
• Applicable to goods dumped into Vietnamese territory;
• The implementation of an anti-dumping tax must not cause damage to domestic economic and social interests.

Exceutive period: No more than 05 years from the effective date of the application decision, however, the application of anti-dumping tax can be extended.

How to determine the dumping margin of goods imported into Vietnam

Pursuant to Article 20 of Decree 10/2018/ND-CP stipulates as follows:

Note: Weighted average is understood as a weighted average number of arithmetic mean values that represents the importance of the elements in that set of numbers.

The formula for calculating the dumping margin was explained by VCCI in 2008 as follows:

Dumping margin = (Normal price – Export price)/Export price.

The relationship between anti-dumping margin and anti-dumping tax rate in Vietnam

In principle, based on Point c, Clause 3, Article 81 of the Law on Foreign Trade Management 2017, the anti-dumping tax rate cannot be higher than the dumping margin. This shows that Vietnam wants the goods and products of other countries when sold in Vietnam to be treated fairly and that tariff barriers are to protect the domestic economy, not to punish and deter traders of other countries.

The specific tax rate will be applied by the Minister of Industry and Trade in each case after the conclusion of the investigation agency.

Exclusions

• The volume of dumped imports shall normally be regarded as negligible if the volume of dumped imports from a particular country is found to account for less than 3 percent of imports of the like product in the importing Member. However, to encourage the development of countries with developing economies, the WTO has stipulated cases of exemption from liability for dumped goods originating if the volume of dumped imports from each country which individually account for less than 3 percent of the imports of the like product in the importing Member collectively account for more than 7 percent of imports of the like product in the importing Member.
• Exemption according to the Decisions of the National Assembly, the National Assembly Standing Committee, and the Prime Minister of Vietnam. For the Minister of Industry and Trade of Vietnam, based on Article 10 of Circular 37/2019/TT-BCT detailing several contents on trade defense measures amended and supplemented in Circular 42/2023/TT-BCT stipulates several cases exempted from applying trade remedies as follows:
• Goods cannot be produced domestically;
• Goods that have characteristics different from domestically produced goods that cannot be replaced by those domestically produced goods;
• Goods are special products of similar goods or directly competitive goods produced domestically;
• Like goods and directly competitive goods produced domestically cannot be sold on the domestic market under the same normal conditions or in cases of force majeure leading to a shortage of supply from the domestic manufacturing industry.

Anti-dumping legal consulting services of Viet An Law

• Calculating dumping margin service in Vietnam according to current legal regulations for customers;
• Consulting on implementation of anti-dumping laws according to Vietnamese law;
• Consulting and analysis on whether client’s goods and products are affected by anti-dumping tax in Vietnam;
• Consulting on the dumping margin and whether the volume and value of the client’s goods are within the anti-dumping margin in Vietnam;
• Representing customers to work with competent state agencies in explaining and verifying records and data provided by clients if requested by state agencies to determine whether customers are committing illegal dumping acts in Vietnam.

Above is the advice on calculating dumping margin service in Vietnam from Viet An Law. If you need advice on legal issues related to anti-dumping, please contact Viet An Law for the best support.