Recently, the Ministry of Industry and Trade has submitted to the Prime Minister for approval of the Project "Strengthening the state management on the avoidance of trade remedies and origin fraud". The project has set out many tasks and solutions to enhance the state management of export, import, and foreign investment activities; prevent and strictly handle acts of evading trade remedies and goods origin frauds, including high-risk goods such as plywood.
Accordingly, in order to strengthen the management of plywood exports to the US to prevent trade frauds on the origin of goods, illegal transshipment, there is a risk that the US may tighten management measures for Vietnam's export plywood, negatively impacting domestic production and affecting the interests of genuine businesses, based on the Government's Decree No. 69 detailing a number of articles under the Foreign Trade Administration Law, the Minister of Industry and Trade signed Circular No. 22 on the temporary suspension of trading in border-gate transfer and trading in the temporary import of plywood into Vietnam for re-export to the US.
Accordingly, the Ministry of Industry and Trade issues regulations on the temporary suspension of trading activities of temporary import and temporary import into Vietnam for re-export to the United States for plywood products of heading HS 44.12 according to the List of exported and imported goods. Vietnam issued together with Circular No. 65 of the Ministry of Finance.
Specifically, this provision applies to traders engaged in border-gate transfer business activities, temporary import for re-export business; agencies and organizations managing border-gate transfer business activities, trading in temporary import for re-export; agencies, organizations, and individuals involved in activities of trading in border-gate transfer, trading in temporary import for re-export.
Earlier, VnEconomy reported that plywood is an item assigned by the Ministry of Industry and Trade - level 4 - the highest level of danger of tax evasion. From 2017 to 2018, the US Department of Commerce continuously conducted anti-dumping and anti-subsidy investigations on wooden products from China. Accordingly, the US has imposed an anti-dumping duty on the timber of up to 183.36% and China's anti-dumping duty on this product is 22.98% - 194.90%.
This tax wall makes wooden products from China powerless to gain access to the US market. Therefore, Chinese businesses have sought to borrow origin from countries that have not been imposed or imposed low taxes by the US.
This risk exists and is easily recognized by US officials. In November 2018, the US Customs and Border Protection Agency initiated an investigation against evading trade remedies taxes in the form of transshipment of plywood products imported from Vietnam on a suspected public basis. Finewood Vietnam has committed acts of evading trade defense tax.
The Ministry of Industry and Trade also found that plywood imported from China dropped by nearly 81% in 9 months of 2018, Vietnam increased by 516% in the same period.
From October 2018 to the first 5 months of 2019, the US conducted an anti-evasion tax investigation against plywood products, so USITC does not publish data on some high-import products from China and Vietnam to ensure objectivity in the investigation process.
However, according to data provided by the Vietnam Customs, in the first 5 months of 2019, Vietnam's plywood export turnover to the US for the HS codes under investigation reached US $ 25.6 million.
Currently, because the US Customs and Border Protection has conducted a tax evasion investigation in the form of transshipment of plywood products imported from Vietnam, it is necessary to strengthen inspection and supervision for businesses exporting this item to the US.