US-bound Chinese goods, such as plastics, optical, electronics, subject to US anti-dumping duties have decreased in volume, but transshipment of similar goods to the US via third countries, including Vietnam, is surging, according to Claudio Dordi, chief of party of USAID Trade Facilitation Program.
| Overview of the workshop. Source: USAID. |
“Why transship through Vietnam? Because the country is an ideal trade and investment partner, which is part of several free trade agreements with all main economies,” said Dordi in a workshop discussing measures to prevent illegal transshipment held today [November 14].
Moreover, Vietnam is the US’s fifth source of imports from Asia, after China, Japan, South Korea and India, while the Southeast Asian country is well integrated in several products’ value chains, added Dordi.
“If not properly addressed, illegal transshipment would increase the risk of Vietnamese compliant traders facing slower export procedures in the US, as well as higher customs duties,” stated Dordi.
Statistics from the General Department of Vietnam Customs (GDVC) revealed that a number of commodities exported to the US witnessed high growth in the first nine months of 2019, including electric wires and cables with 252.31%, plastic materials with 147.85%, furniture from materials other than wood with 140%, among others. Notably, plastic materials exported to the EU also increased more than 10-fold during the period.
Au Anh Tuan, director of the GDVC’s Customs Control and Supervision Department, said the customs authority has categorized such goods into groups risking frauds, due to sudden surges in exports.
USAID’s Dordi said there are various ways to commit trade fraud.
Firstly, simple “transshipment” to Vietnam without physical modification of the product. In this case, a product was provided with fake labels or falsified origin declaration – e.g. submitting false documents to the entity in charge of issuing the certificate of origin.
Secondly, exporting the disassembled product to Vietnam where simple assembly operations (not amounting to substantial transformation) are carried out.
“Such simple assembling process is not sufficient for a product to be qualified as of Vietnamese origin,” stressed Dordi.
Tuan from the GDVC pointed to a number of cases in which Chinese goods forge Vietnamese origin for exporting purpose. In the first case, the Customs Department of Hai Phong found a wholly foreign-invested export processing company that has signs of committing frauds and falsification of Vietnamese origin.
“This company imported spare parts from China to Vietnam and then, by applying some further simple steps, assembles these spare parts bundles into complete products for exporting to a third country,” Tuan said.
In another case, the Customs Branch of Saigon Port Border-gate detected and seized a shipment from Company “B”. The goods were temporarily imported from China and then exported to the US under the temporary import for re-export mechanism.
“Physical inspection showed that this imported shipment contains MONSTER-branded cables, with the words “Made-in-Vietnam”, “Manufactured in Vietnam for Vanco International” readily printed on the package,” Tuan added.
USAID helps Vietnam prevent illegal transshipment
Michael Greene, mission director of the USAID, said “origin fraud, illegal transshipment, and the circumvention of trade remedies harms the healthy, bilateral trading relationship between Vietnam and the US and other important trading partners.”
| Michael Greene, mission director of the USAID in Vietnam. Source: USAID. |
Greene expected the USAID Trade Facilitation Program would help Vietnam address these issues and promote a more effective partnership between government entities and customs departments, at both central and local levels, and the business community.
On this issue, Vice Minister of Finance Vu Thi Mai stressed the Vietnamese government has made significant progress in implementing an interagency project approved by Prime Minister Nguyen Xuan Phuc in July to strengthen efforts to circumvent trade remedies and origin fraud.
For example, provincial customs agencies now perform document and physical inspection and supervision to determine origin of export – import upon customs clearance, while central customs authorities are applying technical measures to identify high-risk goods and enterprises, among others.
Between January and October, the US remained Vietnam's biggest export market, spending US$49.9 billion on Vietnamese goods, up 26.6% year-on-year, followed by the European Union with US$34.2 billion, down 1.9%, and China with US$32.5 billion, down 2.9%.
Meanwhile, China remained Vietnam's largest import market with turnover of US$62 billion, a 16.1% climb year-on-year.
South Korea claimed the second place by exporting US$39.4 billion worth of goods to Vietnam, up 0.6% year-on-year, followed by ASEAN with US$26.4 billion, up 1%.
