Consulting on trade defense law in Vietnam

The free trade of goods and products between countries is now increasingly strong, raising concerns about protecting the domestic economy and production, and creating legal barriers for the country. These legal barriers are often referred to as national trade defenses. In Vietnam, we also build and implement activities to protect the national economy and domestic production. Each trader needs to clearly understand their country’s trade defense regulations to be able to protect themselves when necessary and request protection from their Government when necessary.

Legal basis

• General Agreement on Tariffs and Trade (GATT);
• Agreement on Safeguards (SA);
• 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 defenses;

What is a trade defense?

Pursuant to Article XIX of the General Agreement on Tariffs and Trade (GATT), which mentions trade defense acts and conditions for implementing trade defenses for countries that are WTO members. In addition, the WTO also issued the Safeguard Agreement (SA) to more clearly explain the content specified in Article XIX of GATT, including 4 groups of main content below:

• Conditions for applying safeguard measures;
• Investigation procedures and methods of applying safeguard measures;
• Regulations on compensation measures;
• Priority is given to developing countries.

In Vietnam, according to the interpretation of VCCI (Vietnam Confederation of Commerce and Industry), a trade defense is a temporary import restriction on one or several types of goods when their imports rapidly increase which causes or threatens to cause serious damage to the domestic industry. The application of these trade defenses is only applied to goods and each country in the WTO has the right to carry out these activities, but attention should be paid to the conditions required by the WTO for the threshold of violation.

What activities does trade defense in Vietnam include?

Trade defenses in Vietnam include 3 main activities corresponding to regulation in 3 agreements within the scope of WTO:

• Anti-dumping;
• Anti-subsidy;

Why must trade defense be implemented?

The implementation of trade defense helps countries reasonably protect their domestic economies against malicious attacks or unfair trade practices to eliminate the formation of trade barriers and the development of some industries of other countries, especially poor countries and or developing countries.

Provisions of Vietnamese law on trade remedies

Vietnam is a country that focuses on international cooperation and development. In the context of needing to promote sustainable economic growth while protecting domestic production, Vietnam has built many legal grounds based on the WTO Agreements on trade defense, including:

• Law No. 05/2017/QH14 (Law on Foreign Trade Management) was enacted on June 12, 2017;
• Law on Export Tax and Import Tax 2016;
• Decree 10/2018/ND-CP dated January 15, 2018, of the Government, detailing several articles of the Law on Foreign Trade Management on Trade defenses;
• Circular No. 14/2021/TT-BCT dated October 29, 2021, of the Ministry of Industry and Trade on instructions for implementing the Free Trade Agreement between Vietnam and the United Kingdom of Great Britain and Northern Ireland (UKVFTA) on prevention commercial defense;
• Circular 30/2020/TT-BCT dated November 26, 2020, of the Ministry of Industry and Trade on instructions for implementing the Free Trade Agreement between Vietnam and the European Union (EVFTA) on trade defense;
• Circular 37/2019/TT-BCT dated November 29, 2019, of the Ministry of Industry and Trade detailing several contents on trade defense;
• Circular 19/2019/TT-BCT dated October 30, 2019, of the Ministry of Industry and Trade on Regulations on the application of special safeguard measures to implement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) ;
• Circular 38/2015/TT-BTC dated March 25, 2015, of the Ministry of Industry and Trade on Customs Procedures Regulations; customs inspection and supervision; export tax, import tax, and tax administration for exported and imported goods;

What are the conditions for applying safeguard measures?

It can be quickly understood that a country’s use and application of safeguard measures is conditional and only when certain conditions are met can it apply trade defense sanctions against the country. with certain subjects. Normally, before applying a trade defense mechanism, a country must carry out at least 2 activities including (1) investigation activities and (2) proof of the existence of all of the following elements:

• Imported goods subject to investigation have suddenly increased in quantity;
• The industry produces like products or products that directly compete with the goods, and that product is damaged or threatens to cause serious damage;
• There is a cause-and-effect relationship between the sudden increase in quantity and the damage or threat of serious damage mentioned above.

Identifying factors to implement trade defense

The number of goods increased dramatically

It is necessary to identify two factors: (1) increased quantity of goods and (2) sudden increase.

• Increased quantity of goods: This increase is defined as an increase in quantity with a level determined to be absolute. For example: Import output doubled compared to the most recent time or at a time when like products in the domestic market were in decline.
• Sudden increase in goods: This is understood as the increase in goods mentioned above that takes place in a short time, quickly or immediately.

Serious damage

Domestic manufacturing industry

The domestic industry includes industries that produce like products or products that directly compete with the imported products under investigation.

• Like products are products that are identical or have similarities in properties, uses, quality, and customer uses.
• Directly competitive products are products that can replace the imported products under investigation to a certain extent and under the specific conditions of the importing country’s market.

Principles of applying safeguard measures

The WTO requires member countries and Vietnam to internalize the following four elements:

• Ensuring transparency: Investigation decisions need to be publicly announced, etc.;
• Ensure the investigated party’s right to present, counterclaim and defend;
• Ensuring information confidentiality;
• Conditions for provisional measures.

Level of safeguard

The level of safeguard is limited to what is necessary, that is, sufficient to prevent and compensate for damages caused by the harmful act. This is understood to mean that countries do not use this regulation as a weapon or legal barrier to create unfair competition between countries.

The application of safeguard measures also makes no distinction between countries (origin of goods).

Safeguards legal consulting services of Viet An Law

• Consulting on trade defense law in Vietnam based on the current domestic law;
• Carry out specific consultation and analysis on whether the customer’s goods and products are affected by safeguard regulations in Vietnam or not;
• 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 acts. operational violations must apply safeguard measures in Vietnam.

Clients who need consulting on trade defense law in Vietnam, please contact Viet An Law Firm to receive the best support from our team of lawyers!