Vietnamese export businesses should take note of the US trade protection policies.

According to the Trade Remedies Department, in anti-dumping investigations, because the US has not recognized Vietnam as a market economy, it will use the costs of a third country (a surrogate country) to calculate the normal value in anti-dumping cases, leading to higher anti-dumping duties that do not accurately reflect the reality of our production and exports.

The list of alternative countries to Vietnam, as updated by the US, is based on the following two criteria:

Firstly, it is a country with a level of economic development comparable to Vietnam, and secondly, it has a significant number of manufacturers producing products similar to the product under investigation.

If more than one country meets both requirements, the U.S. may choose a single country with the most readily available and highest-quality data.

The latest list, updated in August 2023, includes 6 countries: Indonesia, Jordan, Egypt, Philippines, Morocco, and Sri Lanka.

The new regulations on trade defense investigations, officially effective from April 24th of this year, stipulate that when selecting surrogate countries to calculate anti-dumping margins for non-market economies (including Vietnam), the DOC will exclude countries that provide extensive export subsidies/subsidies or are subject to anti-dumping duties related to surrogate value/non-enforcement and have weak or ineffective enforcement mechanisms regarding intellectual property rights, human rights, labor, and the environment, because the surrogate value, benchmarks, or production costs in these countries are likely to be distorted or inconsistent with market principles.

In the absence of a suitable surrogate value proposal from a market economy with a level of development comparable to Vietnam, the DOC will use the surrogate value of a market economy with a level of development not comparable.

Furthermore, this provision also allows that, in the absence of a suitable surrogate value proposal from a country that is a significant producer of goods comparable to those under investigation, the DOC may use the surrogate value of a market economy country that is not a significant producer of goods comparable to those under investigation.

This could lead to the DOC choosing a surrogate country that is more developed than Vietnam or is not representative for comparison, thereby increasing the surrogate value and pushing the dumping margin higher.

Under U.S. regulations, interested parties have the right to submit comments on the choice of water and surrogate values ​​within 30 days before the DOC issues its preliminary findings in the case (within 140 days of the initiation of the investigation - this period may be extended).

Parties may also propose alternative countries not included in the above list for DOC consideration.

This is an opportunity for the businesses under investigation to propose alternative countries and data sources that are cost-effective for their production.

In fact, many Vietnamese businesses exporting pangasius, warm-water shrimp, tires, etc., have used this right to propose suitable alternative countries and thereby benefit from a 0% countervailing duty rate.

In anti-subsidy investigations, the US also uses the benchmark of a surrogate country when calculating the subsidy margin, leading to higher anti-subsidy tariffs.

For example, the US could use the interest rates on loans or land leases in other countries as a benchmark (usually high) to compare with the interest rates on loans or land leases of Vietnamese businesses (usually lower) to calculate the benefits that businesses receive, thus pushing the subsidy margin higher.

Therefore, to achieve the best results, Vietnamese export businesses facing US investigations into the application of trade defense measures should proactively develop proposals for alternative countries (within or outside the DOC list) and appropriate alternative data sources for each cost category as soon as they receive information about the case.

Vietnamese export businesses can proactively contact and consult information from industry associations and businesses, foreign or international associations related to the investigated product, and importers; and refer to the experiences of associations and businesses with low tariffs to find and identify alternative countries and publicly available data sources that meet the criteria of the DOC and are appropriate for the investigation period.

Prepare and submit your water and alternative value proposals within the stipulated timeframe, and cooperate fully with the U.S. investigating authorities throughout the entire process.