Origin fraud threatens duties on Vietnamese wood, seafood exports to US

Vietnam’s wood and seafood exports could be the next to attract U.S. tariffs if it fails to prevent goods origin fraud, experts have warned.

A female worker dries the bark of acacia trees used to produce plywood in the northern province of Hoa Binh, Vietnam. Photo by Shutterstock/Leotie.

Economist Le Dang Doanh said local exporters should be alarmed by duties that the U.S. recently imposed on certain steel from Vietnam, since it means the former is targeting the latter as a country that abets illegal circumvention of tariffs.

"Vietnam might need to reduce exports of items to the U.S. which are suspected of circumventing trade duties," he told VnExpress International.

The U.S. this month slapped duties of up to 456 percent on some steel products from Vietnam, which it alleges are produced in South Korea and Taiwan.

Minister of Industry and Trade Tran Tuan Anh said at a conference Tuesday that wood, seafood, agriculture, textiles, leather, and electronics are other sectors that need to be surveilled to avoid origin-related fraud. 

The trade ministry warned last month that chances were high Chinese companies would borrow the made-in-Vietnam label to export its plywood to the U.S. to avoid a 25 percent duty.

In the first five months of this year Vietnam’s wood and wood products exports to the U.S. rose by 35 percent year-on-year, while its imports from China rose by over 35 percent, according to Vietnam Customs.

U.S. Customs and Border Protection said last November it was investigating suspected circumvention of tariffs by Chinese plywood exporters by shipping to the U.S. through Vietnam where labels were changed.

Huynh Van Hanh, deputy chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said that there are possibilities that U.S. could slap duties on wood products exported from Vietnam."If that happens, the whole industry will have to face severe losses," he told local media.

Vietnamese seafood could also be sailing in troubled waters. Minh Phu Seafood JSC, one of the country’s biggest shrimp processors, has recently been accused of evading anti-dumping duties by exporting Indian shrimp to the U.S.

An Illinois representative alleged in an email that Minh Phu bought a large amount of frozen shrimp from India, processed it at a "minimum" level in Vietnam, and sold it to the U.S. through a subsidiary as a Vietnamese product.

This and other similar cases of origin-related fraud are a red flag for experts. Economist Vo Tri Thanh said other countries would seek to take advantage of Vietnam’s trade pacts to increase their exports to third countries, which could result in Vietnam being slapped with high duties. "Vietnam needs to make a big effort to stop this," he said.

Following the U.S.’s imposition of duties on steel, Prime Minister Nguyen Xuan Phuc last week signed a decision to prevent the circumvention of trade defense measures, especially origin-related fraud, and Vietnam being used as a transit point for exports to third countries. 

The U.S. was Vietnam’s largest export market in the first half, with shipments rising by 27.4 percent year-on-year to $27.5 billion, according to the General Statistics Office.

Vietnam’s imports from the U.S. in the same period were worth $7.1 billion for a trade surplus of $20.4 billion, it said.