Solution to reduce origin evasion
30/11/2020 02:53
Solution to reduce origin evasion


Once again, the topic of avoiding origin fraud in the wood industry is raised by the State authorities, when the trend of fraud becomes clearer and it is not just a single act which has become a hot potato for them in the industry.  

According to the signed trade agreements, there are still large gaps for origin fraud to have a chance to arise, now, with the third countries being taxed from a country that the wood industry is exporting, we open the official  sources of raw materials and products for a third country. At the same time, we do the next steps, finishing products for export, which affects the trade policy that will be imposed on Vietnam. 

Specifically, the wooden furniture for exporting to the US has had a very high growth for the past 9 months, up to US$3.5 billion, only after Samsung phones, and up to 24% over the same period last year. The FDI shift to avoid dumping is a natural trade flows, but it is necessary to have a clear view, Mr Do Xuan Lap, Chairman of the Vietnam Timber and Forest Product Association said in the latest meeting. But how to make trade flows doesn’t skew the balance of trade too much with the United States (more than US$43 billion), that the wood industry is one of the industries that play an important role in offsetting this trade deficit. And this is also the thing which the State authorities are more concerned about. 

The shift in FDI inflows often brings optimism to the economies, but it also causes great harm, when the US may impose the tariffs on Vietnamese wood products, in the short term, they are plywood, all kinds of kitchen cabinets, bathroom cabinets which are in great danger. According to the General Department of Vietnam Customs, in the first 9 months of 2020, furniture parts increased sharply from US$42.5 million to US$95.1 million, of which imports from China were US$85.5 million doubled compared to last year. So how to make barriers to these goods to slow down, it is one of the difficult problems. Meanwhile, the trade agreement between ASEAN, as well as Vietnam with China, the tariff related to sawn wood, detailed timber, product parts is zero, for finished products is 7.5%, special tax is 5%, but the wood products imported from China into Vietnam are only recorded as wood details, so it is too easy, and this has an impact on Vietnam itself, when Chinese businesses which are imposed the tariffs by the US are shifting to Vietnam to evade them. 

According to Mr. Do Xuan Lap, based on Decree 102, in order to reduce the tempo and rate of importation of wood products or parts, it should regulate the products from China or Ukraine in high-risk geographical areas, so that they can be checked more carefully, because enterprises importing these goods must be listed according to that geographic areas, we can attribute them to a high-risk geographical area,. 

Secondly, the import declaration of the parts, the details of the kitchen cabinet, bathroom or sofa, have been fixed or amorphous, planed or painted, checked according to different sizes, if the declaration in this way, it must put into the Log list, plus the actual import, to ensure accuracy and transparency, also make the factors of time, administrative procedures, this is often misrepresented. 

Thirdly, if the product is finished, disassembled into separate parts to avoid the 5% tax and enjoy 0% tax, how we check. And the matter of contraband investment or the factory with small capacity but large export (in Binh Duong, Dong Nai), how the Customs must check and coordinate with the wood industry in order to point out contraband and fraud businesses, it is necessary to have synchronous and rhythmic solutions, to make technical trade barrier to limit this risk. 

Agreeing with the opinion of Mr. Do Xuan Lap, a representative of an enterprise, said that making a trade barrier is difficult but it is extremely necessary, to avoid losses and not let doubt by partners. Accordingly, the goal of making trade barriers is to reduce the progress of countries taking advantage of Vietnam's policies to export to a third country, and to do that, we must apply the area code for the imported details into Vietnam, it is also necessary to build the area code, as well as compare with the Log list.  For disassembled products to avoid 5% tax, the establishment of trade barriers is even easier and in accordance with legal regulations as well as bilateral trade policy. Besides, it is postinvestment surveillance, because we are being taken advantage of tax policies, human resources and brand names.

Mr. Au Anh Tuan, Director General of Customs Control and Supervision Department, said that the Customs had a firm grasp of the issues of origin fraud, trade fraud, this one had been intensifying the inspection, determination of origin, and antifraud, counterfeit origin. The General Department of Vietnam Customs has requested the local customs to check and determine the origin of plywood, kitchen cabinets, bathroom cabinets and sofa. However, the problems of enterprises have not been fully resolved, and they need more research on trade barriers to ensure effective management of the Customs.  

Duc Thanh (Go Viet no 128 November 2020)