Regulations on trade defense in CPTPP and the situation of trade defense investigations of CPTPP members

The content of Trade Remedies in CPTPP is stipulated in Chapter 6, including 2 parts: Part A (Safeguard measures including global safeguards, transitional safeguards) and Part B (Anti-dumping and countervailing measures), in which:

- global safeguards: comply with WTO, with a few additional provisions of WTO+ nature;

- transitional safeguards: detailed regulations on some investigation procedures and processes;

- anti-dumping and countervailing measures comply with WTO, however, with an additional (non-mandatory) Appendix detailing some procedures and processes,

In addition, for textile/clothing products (generally referred to as textiles), there are also separate regulations on emergency measures (understood as transitional safeguards for textiles).

1. Trade Remedies Regulations

1.1. Part A (Safeguard measures[1]) provides for measures: (i) global safeguards[2]; (ii) safeguards applied during the transition period[3] (intra-bloc safeguards applied to CPTPP Members).

a. Some definitions (Article 6.1): on domestic production, serious damage, threat of serious damage, transition period, transitional safeguard measures. These definitions are basically no different from the provisions of the WTO and other FTAs, except for the provisions on the transition period as analyzed above.

b. Global safeguards:

- Refers to compliance with the rights and obligations of the WTO Safeguards Agreement and does not prescribe any additional rights and obligations[4] except for one obligation: The investigating Party shall provide the parties with an electronic copy of the notification sent to the WTO Safeguards Committee.[5] According to the WTO, WTO Members must send to the WTO Safeguards Committee notifications related to the main stages of the investigation (initiation, conclusion of serious injury/threat of serious injury, imposition/extension of measures[6]). The provisions of Article 6.2.3 of the CPTPP aim to provide timely and direct information to CPTPP partners related to the safeguard investigation in addition to the information channel through the WTO.

- In addition, global safeguard measures will not apply to products subject to tariff rate quotas (TRQs) that a Party applies under this Agreement.[7]

- Measures may be excluded for imports subject to tariff rate quotas under this Agreement and specified in Annex A of the Tariff Reduction Schedule (Annex 2-D Tariff Commitments) if such imports are not the cause/threat of causing serious injury.[8]

- Parties will also not simultaneously apply/maintain, on the same product, safeguard measures: safeguard measures of the Agreement (transitional safeguards), global safeguards, safeguards under Annex B of the tariff commitments (prescribed for some specific products/sectors, for example, Japan prescribes safeguard measures for agricultural goods, for wood products. Vietnam does not prescribe Annex B) and emergency measures under Chapter 4 (Textiles and accessories).

c. Transitional safeguards, stipulate:

- conditions of application (for imported goods from one or more parties[9], due to the reduction/elimination of tariffs under this Agreement, if the absolute or relative increase compared to domestic production causes/threatens to cause serious damage to similar/directly competitive goods)[10];

- method of application (stopping tariff reduction or increasing tariff rate to a level not exceeding the most-favored-nation (MFN) tariff rate in effect at the time of application of the measure, or the MFN tariff rate in effect on the day immediately preceding the date of entry into force of the Agreement for the party applying the measure, whichever is lower)[11].

- duration of application: 02 years, extendable for 01 more year (2+1)[12].

- Transition period: 03 years from the date of entry into force of the Agreement or equal to the phased tax reduction period for goods with a longer tax reduction period. Compared with the transition period in some other FTAs: ASEAN-Australia, New Zealand (from the date of entry into force of the Agreement until 3 years after the completion of the tax reduction roadmap of the relevant goods); ASEAN-India, ASEAN-China (similar but stipulated as 5 years), ASEAN-Korea (similar but stipulated as 7 years), Vietnam-Chile (5 years from the date of entry into force of the Agreement unless the goods have a longer tax reduction roadmap), Vietnam-EU (10 years), Vietnam-Japan, ASEAN-Japan (reviewed after 10 years).

- The measure is not allowed to be applied again to the same product[13] (According to the WTO, global safeguard measures are still allowed to be applied again to a product provided that specific provisions on time are complied with (Articles 7.5 and 9.2 of the WTO Safeguards Agreement).

- The form of application (not applied in the form of TRQ[14] or quantity restriction).

- The tax rate when the measure is terminated is the tax rate stated in the Schedule of Commitments of the applying party as if the measure had never been applied.[15]

Some provisions of the safeguard measure in the transitional period are similar to the provisions on global safeguard measures of the WTO, specifically:

- Only apply for the time necessary to prevent/remediate damage and to facilitate the adjustment of production and business plans by the domestic industry,[16]

- Gradually liberalize the measure (progressively liberalize at regular intervals) if applied for more than 1 year.[17]

- Procedures for adjustment investigation, requiring transparency (according to the same procedures as those prescribed in the WTO[18], that is, complying with the provisions on the Investigation Authority having to make public announcements, organize public consultation sessions, publish reports on investigation conclusions and bases for conclusions based on legal grounds and actual facts. In addition, the investigation must consider the issue of damage/threat of damage to the domestic manufacturing industry based on the analysis of production and business indicators (absolute/relative increase in imports, market share lost due to imports, changes in sales, production, productivity, capacity utilization, profit/loss, labor), the causal relationship between imports and the issue of damage/threat of damage; separating the impact of other factors causing damage; publishing an analysis of the consideration of factors, according to Article 3, Article 4.2 (a), 4.2 (b), 4.2 (c) of the WTO Safeguards Agreement.

- notification obligation[19] (when initiating an investigation, concluding that there is serious damage/threat of serious damage, applying/extending/amending measures)[20]. The content of the notification when applying/extending measures includes: evidence of serious damage/threat of serious damage due to increased imports due to the impact of tariff reduction/elimination under the Agreement, description of goods, measures, date of application, duration of application, timetable for gradual relaxation of measures, evidence that the domestic industry is adjusting (in case of extension).[21] This provision is similar to the provision in Article 12.2 of the Safeguards Agreement, with the only small difference being that the notification contents under Article 12.2 must not only be implemented according to Article 12.1 (c) (when applying/extending measures) but must also be implemented when notifying the conclusion of serious damage/threat of serious damage under Article 12.1(b).

In addition, when making the above notifications, a Party is obliged to consult with the Party whose goods are under investigation upon request. [22]

- obligation to compensate[23] when applying measures, specifically: The applying Party must compensate/compensate in the form of concessions with substantially equivalent trade effects (substantially equivalent level) or equivalent to the value of the additional duties of the measure and must create an opportunity for consultation within 30 days from the date of application of the measure[24]. If the consultation does not reach an agreement within 30 days, the affected Party may retaliate[25] (suspend the application of substantially equivalent concessions- to the trade of the applying Party). In principle, this provision is relatively similar to the provision in Article 8.2 of the WTO Safeguards Agreement, except that according to WTO regulations: the notification of retaliation is sent to the Council for Trade in Goods; Prior consultations with interested Parties are required; WTO retaliation must be within 90 days of the imposition of the measure. In addition, the WTO stipulates a non-retaliation waiting period (no retaliation within the first 3 years of applying the measure provided that the measure is due to an absolute increase in imports and complies with regulations.

In addition, retaliation must be notified in writing at least 30 days before the date of retaliation[26]. The obligation to compensate will end on the date the measure is terminated.[27]

WTO+ obligation: the obligation to provide copies of public reports to the parties.[28]

Comparison with EVFTA: Some minor differences between the provisions on safeguard measures in the transitional period of the CPTPP and EVFTA (Vietnam-EU FTA) are as follows: According to EVFTA, the transitional period is 10 years from the date the Agreement comes into effect; the time to apply the measure is 2+2 years, the measure can be applied after the transitional period if the other party agrees; the relaxation of the measure only applies when the measure is longer than 2 years; the right to retaliate is not implemented within the first 2 years of the measure's entry into force if the measure complies with the provisions of the Agreement.

1.2. Part B (Anti-dumping and countervailing duties-anti-subsidy): the parties refer to the provisions of the WTO Agreement, meaning that countries will continue to conduct investigations and apply anti-dumping and countervailing measures according to the WTO. The dispute settlement mechanism of the Agreement will not apply to anti-dumping and countervailing provisions.[29]

Part B also includes Annex 6-A on Practices related to anti-dumping and countervailing investigation procedures, which is a recommendation but not mandatory for some WTO+ provisions (mostly specific provisions on the time limit for performing certain obligations) to increase transparency and limit abuse, specifically:

- Notification period upon receipt of valid dossiers (no more than 7 days before initiating an investigation) [30];

- Notification period for on-site investigation/verification, notification of the intended time of verification at least 10 working days before the verification, provision of content/documents to be prepared for verification at least 5 days before the verification; issuance of a report within a reasonable period of time so that the parties can protect their rights. The report includes the method, procedure of verification, assessment of the extent to which the documents reviewed during the verification process have helped to prove the data provided by the investigated party[31];

- Obligation to maintain public records and lists of documents for review and copying during working hours or to have electronic copies available with copying fees (if any) limited to the cost of the service provided.[32] Public records include public documents and public summaries of confidential information. In cases where individual information cannot be summarized, the Investigation Authority may aggregate. The provision allows the Investigating Authority to compile confidential information into WTO+ public information because the WTO requires the interested party to provide a non-confidential summary. In cases where the information cannot be summarized, the interested party must state the reasons and the investigating authority may not consider the information unless there is evidence from reliable sources that the information is accurate. (Articles 6.5.1, 6.5.2 of the Anti-Dumping Agreement).

- The Investigating Authority shall request additional information from producers and exporters when submitting the investigation questionnaire and shall explain the reasons for not considering part/all of the responses;[33]

- Before making a decision on formal measures, the Investigating Authority shall notify the material facts of the decision on whether to impose duties by any reasonable means, including a summary report of data, a draft or a report on preliminary conclusions or a collection of such reports or conclusions, so that the interested parties have an opportunity to respond. This provision is essentially the same as the provision in Article 6.9 of the Anti-Dumping Agreement.

1.3. Provisions on emergency measures for textiles

In the CPTPP, only textile products are specifically regulated on emergency measures in Chapter 4, Article 4.

In addition, there are some other provisions such as:

- Transitional period: from the date the Agreement comes into effect until 5 years after the date the importing member country eliminates tariffs on textiles and garments of the exporting member country under this Agreement.

- The application of this measure must comply with the published procedures and must notify the other party of this procedure. Specific regulations on the criteria for considering the impact of imported textile products on the domestic manufacturing industry such as output, productivity, capacity utilization, inventory, market share, exports, wages, labor, domestic prices, profits and investment. The following factors are not considered: changes in technology or customer preferences in the importing country.

- The importing country must conduct consultations within 60 days from the date of receipt of the request from the exporting country.

- Duration of application: 2+2 years

- Compensation: compensation will be limited to textile products (unless the two parties agree to compensate for other products). The time limit for the two parties to agree on compensation is within 60 days (or longer if the two parties agree), if they cannot agree within this period, the importing party can retaliate.

- The parties must submit a report in the year of applying the measure to the other parties.

2. Trade situation between Vietnam and CPTPP partners; current status of using trade remedies of the countries

2.1. Import and export situation between Vietnam and CPTPP partners

According to calculations from customs statistics[34], in 2018, Vietnam's exports to CPTPP countries were about 36.8 billion USD (accounting for about 15% of Vietnam's total export turnover); Imports from CPTPP countries are about 37.7 billion USD (accounting for 16% of Vietnam's total import turnover). Of which, Japan is Vietnam's largest partner in both export and import turnover (and the trade balance is relatively balanced, accordingly, Vietnam has a very small trade deficit of about 160 million USD). With Malaysia and Singapore, Vietnam has a trade deficit. As for the remaining countries, Vietnam mainly has a trade surplus.

2.2. The situation of PVTM investigations of CPTPP countries

a. The situation of PVTM investigations in general of CPTPP countries

b. The situation of trade remedy investigations between CPTPP countries and Vietnam

Up to now, Vietnam has been investigated for over 150 trade remedy cases (including anti-dumping/anti-subsidy tax evasion), including: Anti-dumping: 86 cases; Anti-subsidy: 16 cases; Self-defense: about over 34 cases[41]; Anti-dumping/anti-subsidy tax evasion: 20 cases.

Of the 10 CPTPP partner countries, 04 countries have conducted investigations and applied trade remedy measures related to Vietnam's exports, including: Canada (12 cases: 7 anti-dumping cases, 3 anti-subsidy cases, 2 self-defense cases); Australia (09 cases: 7 anti-dumping cases, 2 anti-subsidy cases), Malaysia (06 anti-dumping cases), Peru (02 anti-dumping cases), especially the recent trend of Canada and Australia continuously investigating Vietnam, notably increasing anti-subsidy investigations. Thus, the total number of cases initiated by CPTPP countries and applying measures is 31 cases.

Products sued by CPTPP members and applying trade remedies mainly include steel products (17 cases, accounting for 46% of the total number of cases), aluminum, BOPP film, shoes, transformers, etc., specifically[42]:

Meanwhile, New Zealand, Japan, Brunei, Singapore have never used trade remedies against Vietnam, of which Singapore has not used any measures, Brunei has no legal provisions on trade remedies, Japan rarely uses measures.

c. Vietnam's trade remedy investigation situation

Vietnam has investigated 8 anti-dumping cases, 6 self-defense cases, 1 anti-avoidance case.

Among CPTPP partners, Vietnam has only investigated 05 trade remedy cases related to Malaysia (self-defense: vegetable oil 2012; anti-dumping: stainless steel 2013, MDF wood panels 2019, BOPP film 2019, cold rolled steel 2019), of which the vegetable oil case has expired, stainless steel is under final review, the remaining 3 cases are in the investigation phase.

REFERENCES

1. http://cptpp.moit.gov.vn

2. http://www.trungtamwto.vn

3. http://pvtm.gov.vn

4. Text of Chapter 6 (PVTM) CPTPP

5. WTO Safeguards Agreement