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Taking a stand

FRIday - 11/11/2011 17:58
Vietnam has successfully challenged anti-dumping lawsuits by the US at the WTO and will continue to act in its own interests.


Vietnam has successfully challenged anti-dumping lawsuits by the US at the WTO and will continue to act in its own interests. 
Vietnam finally had a victory over the US imposing anti-dumping tariffs on its frozen shrimp, providing relief to the country’s shrimp exporters after seven long years. But it’s only the beginning of the challenges as the country integrates deeper into the global trade club.
Winning argument
A WTO panel ruled that the US was violating global trade rules in using a controversial calculation method in its anti-dumping case against frozen shrimp imports from Vietnam. They also supported three of Vietnam’s five major complaints relating to the practices of the US Department of Commerce (DOC) in the second and third administrative reviews of the anti-dumping order. 
Vietnam’s complaints against the US were about it using the zeroing method to calculate anti-dumping tariffs. Two other major shrimp exporters - India and Thailand - have also filed successful complaints against the US over the zeroing method. 

According to Mr Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), the method has been strongly opposed by many other countries because it can create a fake anti-dumping margin. DOC only calculates positive dumping margins, with any negative dumping margin being treated as a positive. The use of the method creates a large dumping margin for Vietnamese shrimp, leading to higher tax rates as well as deposits in the millions of dollars. This has cut their competitiveness in the US market.  

The panel concluded the US acted inconsistently with the Anti-Dumping Agreement and the General Agreement on Tariffs and Trade (GATT) and that the US should adjust its tariff calculation method in accordance with WTO rules.  

Argentina, Brazil, Canada, Ecuador, the EU, Japan, Mexico, South Korea and Thailand have all won zeroing cases at the WTO, and in January this year the US promised its trading partners it would change the method. In the interim it reduced its use. In March, however, the US International Trade Commission voted to continue import duties for five more years on shrimp from Thailand, the US’s main supplier, as well as those from China, Vietnam, Brazil and India. That came after strong lobbying from US shrimp farmers in the Gulf of Mexico, who are reeling from last year’s huge oil spill and also from devastating hurricanes, who want zeroing to be continued to shield them while their industry recovers, according to a recent article from Reuters. 
Not the end

Although the tariff imposed on Vietnamese shrimp exporters was set at zero per cent in the second and third administrative reviews, the fourth review saw it rise from 2.5 per cent to 5.58 per cent on the Nha Trang Corp., while other exporters incurred an increase of 1.3 per cent to 4.27 per cent. Vietnam must continue to request the WTO investigate the results of the fourth review, which could help to cease any further reviews by DOC.   

According to Mr Nguyen Huu Dung, Deputy Chairman of VASEP, under DOC regulations an enterprise that bears three consecutive rates of zero per cent is exempt from any anti-dumping tariffs the following year. But US shrimp enterprises have proposed a draft regulating that enterprises are no longer exempt in such cases. If the US Government approves the draft, Vietnam will continue to face anti-dumping disputes. “This is the final chance for us to complain to the WTO about the investigating results of the fourth review before the draft is approved,” said Mr Hoe.

While many local enterprises have enjoyed lower tax rates following DOC’s administrative reviews, others have faced high rates and US importers have refused to sign orders. One Ho Chi Minh City enterprise that was imposed a 4.27 per cent punitive tariff in the fourth review told VET that Vietnamese enterprises will have to spend millions of dollars to engage lawyers for DOC’s administrative reviews if Vietnam does not win the next lawsuit. 

According to Mr Dung from VASEP, after suffering anti-dumping duties on frozen shrimp and also tra and basa fish, Vietnamese exporters have proven that they are not dumping their products. Yet DOC has decided to apply the zeroing method on more Vietnamese seafood exporters. It seems quite clear that the US sets up barriers on imports to protect domestic producers. Some US organisations have protested about the Southern Shrimp Alliance (SSA) filing anti-dumping petitions against six countries, including Vietnam, in the last few years, viewing it as a form of trade protection.

According to the ruling from the Dispute Settlement Body of the WTO, the US went against the provisions of the trade body in applying the zeroing method. Through the law suits Vietnam has at least become familiar with WTO laws and the recent ruling has encouraged it to continue with its legal action. This is the first time Vietnam has deemed it necessary to file a lawsuit with the WTO and the country should  establish a dedicated organisation that is able to resolve such lawsuits and support local exporters, especially as it becomes more integrated.
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