In the name of shielding local businesses from being so-called “robbed of revenue, earnings and jobs”, these individuals advocate misusing trade defence measures as a disguised method of avoiding competition.
Nguyen Phuong Nam, deputy head of Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade is one of those who says not so fast.
At a recent workshop in Hanoi, Mr Nam openly acknowledged that many foreign countries are using trade defence measures such as anti-dumping lawsuits to gain an unfair competitive advantage against Vietnamese imports.
Though he considers these actions deplorable, Mr Nam does not advocate that local companies retaliate by following suit and initiating spurious lawsuits against multinational companies looking to export to Vietnam.
Local businesses should not fear head-to-head, fair and honest competition, said Mr Nam.
But on the other hand, antidumping actions should legitimately be utilized as a punitive action against a multinational company that sells its product in the Vietnamese market at below the local industry’s cost.
In other words, if it costs the local industry US$10 to produce a widget, then a foreign company who is exporting widgets to Vietnam and selling them at US$9 each is dumping (selling at below cost) and an anti-dumping action is warranted.
“If local companies don’t file anti-dumping actions in situations like these where foreign companies are flagrantly selling their exports at below cost they’ll go bankrupt,” said Mr Nam.
Safeguard measures, on the other hand, are much more complex but essentially involve restricting all imports of a product temporarily if a domestic industry is seriously jeopardized or threatened with serious injury caused by a sudden surge in imports.
Generally, it is the affected domestic industry which urges the government to take up safeguard measures against importing companies.
In order to stop protectionism from escalating into trade wars, instruments for administered protection such as anti-dumping and safeguard measures must be restricted to the purposes they are designed for, said Pham Chau Giang, deputy head of Trade Remedies Board of the VCA.
“If local companies improperly use anti-dumping and safeguard measures as a way to disguise protectionism, the consequences could be devastating to the economy as a whole, as it’ll negatively impact all imports and cripple manufacturing,” she said.
To date Vietnamese companies in collaboration with the government have only filed one anti-dumping action, said Ms Giang, as the government prefers to resolve these types of predicaments through ‘amicable solutions’ brought about by diplomacy.
