Exporters urged to actively prepare for trade defence investigation risks when exporting to the UK
Exporters urged to actively prepare for trade defence investigation risks when exporting to the UK
Although there are few trade defence investigations initiated by the UK on imported products originating from Việt Nam, exporters should actively prepare for the risk of more of them, as exports are expected to grow rapidly thanks to the UK-Việt Nam Free Trade Agreement (UKVFTA).
The UKVFTA has greatly improved trade between the two countries since the deal took effect on May 1, 2021. Vietnamese enterprises have successfully taken advantage of the opportunities brought by the UKVFTA to expand exports to the UK.
Statistics from the Ministry of Industry and Trade show that bilateral trade jumped by 17.2 per cent over 2020 to reach US$6.6 billion in 2021. In 2022, despite a drop in two-way trade due to the global economic slowdown, Việt Nam’s exports to the UK rose by 1.9 per cent and by 11 per cent in 2023, while exports to most markets saw decreases.
In the first 10 months of this year, two-way trade reached more than $7 billion, up by 19.9 per cent over the same period last year.
Thanks to the UKVFTA, Việt Nam’s exports to the UK are expected to hit $10 billion in the next few years.
However, along with rapid export expansion, there will be a corresponding increase in the use of trade defence instruments to protect local production industries, requiring manufacturers and exporters to actively prepare for investigation risks.
According to the Trade Remedies Authority of Việt Nam, there is only one trade defence investigation initiated by the UK on Vietnamese products to date, on steel products.
The authority noted that the UKVFTA and the UK’s official participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) from December 15 are creating significant opportunities for Việt Nam to expand exports to the UK. The UK is a large market with a population of around 68 million and a diversified consumption demand.
The risk of trade defence investigations from the UK on Vietnamese export goods is always present.
According to the authority, steel and aluminium products face a high risk of trade defence investigations. Ceramics, tiles and garments are at low risk of being investigated, but caution is still needed.
After Brexit, the UK has remained a member of the World Trade Organization. Thus, the UK’s trade defence regulations are still based on the WTO’s. However, there are some notable differences from EU regulations.
The UK’s trade defence policy focuses on three main measures: anti-dumping, anti-subsidy and safeguard.
Nguyễn Cảnh Cường, former Trade Counselor of Việt Nam to the UK, said that the UK had developed its own trade defence mechanism to protect its domestic industries from unfair competition.
Therefore, to export sustainably to the UK, manufacturers and exporters needed to be careful in managing prices and cooperate closely with relevant parties to avoid investigation risks in the UK.
He also urged enterprises to keep a close eye on updates to UK trade policies to minimise the risk as well as maintain a reasonable pricing strategy.
The Trade Remedies Authority of Việt Nam said that dealing with trade defence investigations was a problem for a majority of Vietnamese exporters. Active preparation would thus be critical to minimise the negative impacts from the investigations as well as the imposition of duties. Manufacturers and exporters should follow early warnings from the Ministry of Industry and Trade for appropriate adjustments in production and business plans, while cooperating with each other to cope with trade defence lawsuits.
Lawyer Nguyễn Thanh Hà, chairman of SB Law Firm, said that enterprises should always be aware that it would be better to compete with quality rather than price in the international market. Quality should be the top priority, which would help not only avoid trade defence investigations but also maintain the competitiveness of Vietnamese products in the international market.
