Many Chinese and Taiwanese manufacturers who want to evade taxes levied on them via trade remedy action have chosen Vietnam as their secondary production base to import their own goods into so as to obtain a certificate of origin for re-exporting.

Vietnamese producers have been caught with Chinese and Taiwanese products in two-thirds of over 20 trade remedy cases in which dozens of countries have sued Vietnam since the beginning of this year, said a high-ranking state official from the Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade.

The involvement of Vietnamese exporters in trade remedy cases overseas, including anti-dumping, anti-subsidy, safeguard action and penalties on tax evasion, has risen fast, the official, who does not want to be named, told Tuoi Tre (Youth) newspaper.

Whenever the VCA receives a notification from a foreign country or territory about an upcoming trade remedy lawsuit, the authority understands the involvement of Chinese and Taiwanese firms in the same case, he said.

“They really do not want to launch legal proceedings against Vietnamese firms, but we suffer the collateral damage caused by Chinese and Taiwanese firms,” he told Tuoi Tre.

An example is Turkey, which kicked off an "anti-tax evasion” lawsuit against Chinese-made granite tiles imported from Vietnam, an expert in trade remedy told Tuoi Tre.

Turkey has slapped an anti-dumping tax worth US$174 on every ton of Chinese granite tiles since 2006, and will extend the taxation to the end of 2017, he added.

The European brought Vietnam to the court for a similar reason in December 2014, an attempt to prevent tax evasion by Chinese firms who had found a way to get their goods into the Southeast Asian country to obtain the certificate of origin, only for the tiles to be re-exported to Europe, he added. 

Tran Thi Thu Huong, director of the Center for Certifying Commercial Documents under the Vietnam Chamber of Commerce and Industry (VCCI), told Tuoi Tre that the risk of commercial fraud from the Chinese and Taiwanese markets is very high.

Most of the firms from the two foreign markets, subject to taxation in other countries, tend to choose nations which have not been on the taxation list, like Vietnam, for the establishment of new businesses and import their goods from China or Taiwan.

When sued, they often choose not to cooperate with the countries where the lawsuits are filed, leading to a final decision always detrimental to the immature manufacturing industry in Vietnam.

A typical case is the dining table made of melamine resin imported from Vietnam into India, which has been levied a dumping tax amounting to $1,732.11 per ton, because there was no involvement of the Chinese companies who made it in anti-dumping suits.

It is time for Vietnamese authorities to tighten inspection and control of foreign enterprises to figure out if they are really producing in Vietnam or not, or what processes are actually happening in Vietnam, Huong said.

VCCI has proposed that the Ministry of Planning and Investment strengthen the control in the early stages of awarding any investment licenses, and even set up a list of suspected types of goods that are being taxed for trade remedy reasons in foreign markets, she added.

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