Consulting on anti dumping laws in Vietnam

Currently, foreign businesses and foreign investors who have invested or are intending to invest in the Vietnamese market will have to comply with legal regulations and carry out certain procedures set by the Vietnamese authorities. Similar to other countries, Vietnam is also a member of the WTO and implements trade defense measures, including tariff barriers and especially regulations on anti-dumping activities against imported goods from foreign enterprises into Vietnam. In the following article, Viet An Law will provide some consulting on anti dumping laws in Vietnam for clients to better understand this field.

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;
• Circular 37/2019/TT-BCT details several contents on trade defense measures, amended and supplemented in Circular 42/2023/TT-BCT.

What is dumping?

Dumping in common sense is the act of selling goods and products below the market price (this low price is understood to be very low, so low that if other sellers in the market sell lower, they will suffer losses) to use one’s own economic, political or other factors to corner the market, forcing other sellers to leave the market, thereby creating a position monopoly and increase the selling price of goods and products, causing damage to the economy and damage to consumers.

According to economists, dumping is a series of intentional measures/behaviors to lower prices or sell goods at a low price (loss-causing price/price lower than production price) to compete with other manufacturers, dominate the market, earn foreign currency quickly, and does not exclude political purposes. Of course, this behavior is unfair competition.

Causes of dumping behavior

• Dumping to eliminate competitors in the market;
• Dominate the market;
• Destroying the domestic production of the exporting country;
• Creating an artificial monopoly position, causing damage to the economy;
• At the request or direction of the Government where the headquarters is located or other requests of a political nature.

What is anti-dumping?

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

• 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 transported into a country B and proceeds to sell the above products lower than the normal price at which those products are being circulated on the market in country B and the consequences of the activity threaten to cause or cause material damage to 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 levels, rates, and margins will depend on each country. In Vietnam, anti-dumping measures are also applied 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 manufacturers domestically if approved by the Investigation Agency.

Regulations on anti-dumping tax in Vietnam

Under Clause 5, Article 4 of the Law on Export Tax and Import Tax 2016, anti-dumping tax is: “Additional import tax is applied in cases where dumped goods imported into Vietnam cause or threaten to cause material damage to the domestic industry or prevent the formation of a domestic industry”. The imposition of an anti-dumping tax is determined to be a trade defense activity according to the provisions of Clause 1, Article 67 of the Law on Foreign Trade Management 2017.

Conditions for applying anti-dumping tax in Vietnam

Under Article 12 of the Law on Export Tax and Import Tax 2016, the conditions for applying anti-dumping tax in Vietnam include the following 3 conditions:

• Imported goods are dumped in Vietnam;
• The dumping margin is specifically determined;
• Dumping activities that cause or threaten to cause material damage to the domestic manufacturing industry or prevent the formation of a manufacturing industry in Vietnam. In addition, according to point c) Clause 1, Article 78 of the Law on Foreign Trade Management 2017, there must exist a cause-and-effect relationship between the three conditions. This cause-and-effect relationship is understood to mean that material damage is a consequence of dumping activities that are directly caused by the above two conditions.

Dumping margin in Vietnam: Anti-dumping tax is only applied to imported goods and products with a dumping margin of 2% or more of the export price to Vietnam.

Principles of applying anti-dumping tax in Vietnam

• Only applied to a necessary and reasonable extent to prevent or limit material damage;
• Is carried out when an investigation has been conducted 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.

Time limit for applying anti-dumping tax in Vietnam

No more than 5 years from the effective date of the decision to apply, however, the application of anti-dumping tax can be extended after each re-examination.

Determine the price of dumped products under Vietnamese law

Based on Clause 2, Article 67 of the Law on Foreign Trade Management 2017, the way to determine the price of products considered dumped into Vietnam is described as follows:

• The selling price is lower than the normal price for like products being circulated in the Vietnamese market (Normal price is the comparable price of like products sold in the exporting country or in a third country under normal commercial conditions or the price that the Investigation Agency determines using its calculation method).
• In case there is no similar product in the market to determine the selling price, the dumping margin will be determined through comparison with the comparable price of like products exported to an appropriate third country, provided that the comparable price is representative, or is determined by comparison with the cost of production in the country of origin of the goods plus a reasonable amount of administrative costs, selling expenses, general expenses, and profits (Article 2.2 ADA).

Anti-dumping legal consulting services of Viet An Law

• Consulting on anti dumping laws in Vietnam and implementation of anti-dumping laws;
• Carry out specific consulting and analysis on whether clients’ goods and products are affected by anti-dumping tax in Vietnam or not;
• Representing clients to work with competent state agencies in explaining and verifying records and data provided by clients if requested by state agencies to determine whether clients are committing illegal acts. dumping in Vietnam.

Above is the consulting on anti dumping laws 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.