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Experts warn wooden furniture producers of high risks in US market
Vietnam-made wooden furniture may face an anti-dumping investigation in the US after the US newspapers reported that Chinese producers are using Vietnam as a place that helps them avoid anti-dumping duties.
An article published in the Washington Post on May 23, wrote that the anti-dumping duties levied by the US on China sourced wooden furniture used for bedrooms, has led to the sharp fall of the exports of these products to the US. However, while the exports from China are on the decrease (From 1.2 billion dollars in 2004, to 691 million dollars in 2010). The exports of these products from Vietnam have increased from 151 million dollars in 2004, to 931 million dollars in 2010.
The article quoted Lawrence Yen, Chair of Woodworth Wooden Industries, as saying that “his factory in China, which previously exported 400 containers of wooden furniture used for bedrooms a month to the US, now can export 60 containers only. “
Therefore, Yen has decided to set up a factory in Vietnam, and he is going to set up another one in Indonesia. Once the factories become operational he will be able to export the products to the US without having to pay the anti-dumping duties, because the duties are not imposed on ASEAN sourced products.
Avoiding tax by changing products’ origins
Nguyen Thi Thu Trang, Member of the Trade Remedy Council (TRC) under the Vietnam Chamber of Commerce and Industry (VCCI), said that even though it is still not clear if Chinese manufacturers try to avoid tax, but she thinks that this is a warning about the risk Vietnamese producers may face when exporting products to the US.
In the past, US lawyers also released the information about the decreases of the plastic bag exports from China to the US, and the increases of the exports of the products from Vietnam to the US, which then raised a doubt that China transferred their production bases to Vietnam in order to avoid anti-dumping duties.
After that, the US officially raised a lawsuit against plastic bags imported from Vietnam, and judged that the products must bear the anti-dumping duties of 52.3-76.11 percent for five years, from May 2010.
According to Trang, foreign exporters may make different tricks to avoid the anti-dumping duties imposed by the US. For example, they may forge the certificate of origin C/O to show that their products are “made in Vietnam”.
The director of a big wooden furniture company in Binh Duong province said that Chinese producers may avoid tax by opening up factories in Vietnam. They may import semi-finished products from China to Vietnam, where they process, paint and export to the US as “100 percent made in Vietnam” products.
Under the current regulations, products will be considered as the products with C/O Vietnam only if the materials of the products account for 40-50 percent of the production costs. However, in one way or another, they will still get C/O Vietnam.
Vietnamese enterprises may suffer
According to Trang, when Chinese producers set up factories in Vietnam, they do not violate Vietnamese laws in the C/O issue. However, this will still be considered as a behavior to evade anti-dumping duties, in accordance with the US laws.
According to Nguyen Ton Quyen, Deputy Chair of the Wood and Forest Product Association, Vietnam is considered a good destination for Chinese producers, because Vietnam does not impose import tariffs on wooden materials, has cheap labor force and does not bear anti-dumping duties.
Trang said that the risks prove to be relatively high, if just the wooden exports from Vietnam increase rapidly and the exports are a bit cheap.
The statistics released by the US agencies showed that Vietnam has become the biggest exporter of the “sensitive” products to the US, after China.
vietnamnet, TBKTSG
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