Machinery / Industrial Parts & Tools

Recently, according to Vietnamese media reports, the Vietnam Timber and Forest Products Association (Viforest) is worried that companies import kitchen cabinets and bathroom cabinet parts from China back to Vietnam, assemble the finished products and re-export them, implement origin fraud, and report to the Ministry of Finance, the Ministry of Industry and Commerce, and the Ministry of Agriculture. The Ministry of Rural Development and the Ministry of Rural Development proposed a surprise inspection of wood materials in kitchenware and sanitary products imported from China that are at risk from Vietnam.

Signs of fraud in origin of some products in Vietnam

According to documents from the Vietnam Timber and Forest Products Association (Viforest), many business members suspect that some companies that import kitchen cabinets and sanitary products from China to Vietnam have signs of export fraud for the purpose of exporting to the United States.

From the end of 2020 to now, the new company that has only been established for one or two years has imported a large amount of wood from China.

Especially kitchen cabinets, sanitary products and plywood products were imported into Vietnam, and there were signs of reselling through many different companies, then processing and assembling them into finished products and exporting them to the United States.

The specific method is as follows:

Newly established or operated Vietnamese companies in the last 1-2 years import kitchen cabinets, bathroom cabinet parts, and plywood parts, then process and assemble the finished products (with a small amount of processing), and then export to the United States.

Vietnamese companies import risky product parts back to Vietnam and trade between different companies. These parts are finally concentrated in one company, assembled by the company, and exported to the United States under the name of the company's own products.

The Vietnam Timber and Forest Products Association (Viforest) stated that although this is just suspicion and the members of the Vietnam Timber and Forest Products Association (Viforest) have not accurately verified it, the import and export volume of such high-risk commodities has been increasing recently, which shows that there is Signs of import fraud.

Relevant departments propose to take measures such as surprise inspections

Since 2019, the United States has adopted trade boycott measures against many wood products exported from China.

Therefore, the United States imposes anti-dumping duties and high tax rates on certain items such as plywood, kitchen cabinets, bathroom products, and wooden sofas, ranging from 55% to 200%. Therefore, there have been incidents of Chinese companies trying to export wood products to the United States through companies in other countries (including Vietnam).

The Vietnam Timber and Forest Products Association (Viforest) emphasized that while the United States is investigating fraudulent plywood origin and conducting 301 investigations, in order to prevent and stop fraudulent trade activities in origin, Viforest proposes the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, and the Ministry of Finance. Instruct relevant specialized departments to conduct surprise inspections and inspections of suspicious enterprises (enterprise imports high-risk items, and the import volume grows rapidly), and take measures to prevent and promptly deal with violations of individuals and enterprises (if any).

Vietnam involved in multiple export trade remedy cases to the U.S.

Previously, Trần PhúLữ, deputy director of the Investment and Trade Promotion Center of Ho Chi Minh City, said that the United States is the world's largest market, but it is also a very demanding market. Vietnam's exports to the United States may face anti-dumping lawsuits and trade remedies.

As of the end of last year, there were 193 trade remedy cases involving US investigations into Vietnamese exports, including 108 anti-dumping cases, 22 anti-subsidy cases, and 23 tax evasion cases. Most of the Vietnamese products under investigation are products with competitive advantages, including metals, fibers, aquatic products, plywood, construction materials and chemicals.

Diệp Quốc Kế, CEO of ASIA Golden Link INC, said that Vietnamese companies need to understand U.S. laws to respond to U.S. trade remedies. Since each state in the United States has its own laws, companies must understand the U.S. legal system and federal laws. In addition, it is very important to understand trading partners to avoid high-risk transactions.

C. Matthew Schulz, an attorney at Denton American Law Firm, said that the United States will adjust its trade policies regularly and for various partners to protect its corporate interests. The United States generally chooses countries with a large trade surplus and rapid import growth as the target. Such countries will face the risks of litigation and trade remedies. The United States has strict policies on origin fraud and trade tax evasion. Therefore, Vietnamese companies should maintain caution and transparency in traceability information, and accurately classify their products when exporting to the United States.