WTO’s anti-dumping duty and its application in Vietnam

The anti-dumping duty was applied for the first time in Canada in 1904 and since then has become prevalent  not only in such developed countries as Canada, the European Union and Australia but also in developing economies like Brazil, Argentina, Mexico, India and Malaysia. The tax is an effective tool to protect domestically made products against the dumping of imported goods in the domestic market.

Dumping and WTO-specified anti-dumping tax

Under the GATT, importing countries are allowed to take anti-dumping measures only when they meet three conditions. First, the imported goods are dumped. Second, the dumping damages or threatens serious damages for domestic production. Third, the investigation of the dumping proceeds in compliance with the specified procedures.

The WTO’s anti-dumping agreement includes detailed stipulations on dumping identification principles, dumping range calculation methods and dumping investigation procedures.

-          Dumping identification: The sale of a product is considered dumping when its export price is lower than its comparative price under normal trade conditions (the normal value) or the price of a similar product sold in the market of the exporting country.

-          Dumping identification principles: the dumping range is the differecne between the normal value and the export price. If the dumping range is above zero then dumping will be recognized. The dumping range can also be some absolute value or percentage that is calculated by the formula: dumping range = (normal value – export price)/export price x 100%.

-          Dumping range calculation: First of all, it is necessary to calculate the normal  price of a product as in fact, the domestic price of the substitute product in the exporting country sometimes cannot be identified. This happens when the product is not available  in the market of the exporting country under normal trade conditions or is available but under special conditions. In such a situation, the normal price of the product can be identified as equal to export price of a similar product to a third country, or calculated as the sum of the production cost and administrative, sale, management expenses and profits.

If the subtitute product is exported from a country that runs a non-market economy, the above principles will not be applied to identifying the normal value. In this case, a third country that runs a market economy and is considered a having the same economic development standard as the exporting country can be selected for comparision.

-          Damage identification: the damage caused by dumping is often identified based on two elements: the import volume of the dumped goods and the influence of those imported goods on the price of the substitute products. If the dumped goods are imported from different countries, the dumping range will be calculated as equal to or more than to 2% of the export price. And the import volime of goods from each country will account for 3% or a higher percentage of the import volume of the sustitute products.

Before deciding to apply the anti-dumping duty, the importing country can take the following three temporary measures: (1) impose a tax on the imported goods that are suspected as being dumped; (2) compel the importer to deposit an amount of money that is equivalent to the proposed anti-dumping duty (this is the most prevalent measure); (3) accept the customs clearance but maintaining the rights to tax and indicate the normal import tax as well as the proposed anti-dumping duty. The value of the anti-dumping duty is not allowed to be beyond the dumping ranges. The anti-dumping duty can be collected in two forms: (a) Retroactive duty; (b) fixed duty.

How does the duty work in Vietnam ?

Vietnam is on the way of negotiations for its accession to the WTO and is making trade policies in compliance with WTO’s regulations….However, Vietnam will encounter many difficulties either when it is an exporter or an importer. The first difficulty   is that domestic enterprises do not properly understand  and fail to apply international trade regulations related to dumping.

Secondly, to be successful in a dumping dispute, we need the effective cooperation from those who are involved in the dispute.

Thirdly, Vietnam is in the process of making and perfecting its economic and commercial law. We still have no anti-dumping law to cope with dumped imports and lack the necessaty regulations to deal with anti-dumping measures taken by other countries against our exports.

Fourthly, a fact that cannot be ignored is some countries have not recognized that Vietnam is running a market economy. Therefore, those countries that import Vietnamese products can take the price in a thirs country into compatision to decide whether to impose an anti-dumping duty on our exports. Such comparision is often unequal, and consequently, Vietnamese exports are considered as dumped goods.

Vietnam is integrating deeply and comprehensively into the world economy. In such a situation, applying  anti-dumping duty in compliance with the WTO’s regulations is a matter of urgency./.

Vietnam Taxation