Over the last few years, firms exporting Vietnamese basa and tra fish fillets to the US have faced severe problems due to a sudden increase in anti-dumping duties. At these rates, the Vietnamese exporters will find it increasingly difficult to export to the US market. Dharmendra N. Choudhary, a Washington DC-based international trade attorney with the law firm GDLSK LLP, speaks about the reasons behind the change.
Why has the Department of Commerce insisted on selecting Indonesia as surrogate country for Viet Nam? What are the main causes and objectives? As a surrogate value expert, how do you evaluate the Department of Commerce’s actions in relation to Vietnamese fish exporters?
Dharmendra N. Choudhary
For a long time, Bangladesh was consistently selected as the surrogate country from a list of six potential surrogate country choices circulated by the Office of Policy of Commerce at the beginning of each proceeding.
Very significantly, in these proceedings, Indonesia was not only one of the available surrogate country choices, but also the one for which the US domestic industry vigorously argued. Even then, commerce had all along preferred Bangladesh over Indonesia.
After losing the issue again in 2013, the US domestic industry brought to bear significant pressure on commerce to reject Bangladesh and select Indonesia, a significantly advanced country with higher costs of inputs. Their main motivation for Indonesia was obviously to achieve a higher anti-dumping duty rate.
In order to discredit Bangladesh, the US domestic industry directed their attack against the strongest data in Bangladesh - the price for the main input - whole fish - published by the department of agriculture marketing (DAM data).
However, the Department of Commerce faced a major legal hurdle in selecting Indonesia in the eighth review since Indonesia had just been removed from the list of potential surrogate countries that were deemed “economically comparable” to Việt Nam based on per capita GNI data. On account of its very high GNI, Indonesia was no longer economically comparable to Việt Nam. Consequently, under US law, the Department of Commerce was precluded from selecting Indonesia as the surrogate country. This is because the Department of Commerce is mandated by law and settled practice to select only an economically comparable country (except in exceptional situations, that is, when none of the six countries provides it with usable price data).
In course of my several trips to Bangladesh, I had extensively interacted with many senior fisheries officials and obtained with great difficulty several signed official letters from Bangladeshi dam officials demonstrating that dam data was exclusively for whole live pond grown pangasius hypophthalmus fish only, the exact type of fish used in Việt Nam for producing the fish fillets. Even so, commerce rejected the dam data relying on unsupported affidavits provided by the US domestic industry’s paid consultants. We are challenging all these decisions in the US court of international trade.
In subsequent antidumping reviews, the Department of Commerce has simply followed its decision from eighth administrative review, overlooking the threshold question that Indonesia continues to be economically nom-comparable to Việt Nam.
We strongly believe that the Department of Commerce has erred in rejecting the DAM data, and consequently preferring Indonesia over Bangladesh. We are challenging all these decisions in court and hope for a favourable outcome.
How important is the US International trade Court’s recent ruling that it’s Bangladesh, not Indonesia that should be taken as surrogate country for Việt Nam’s case? Is it a final decision ? Is there any possibility that the Department of Commerce would appeal this decision?
The court’s recent decision in the seventh administrative review appeal affirms the reliability of Bangladeshi DAM data. The court underscored the value of the dam official’s letters that affirmed that dam data was exclusively for live fish. Accordingly, the court affirmed the reliability of DAM data and, consequently, the choice of Bangladesh as the surrogate country. This decision is very significant in the sense that it has shut out any lingering doubts about the reliability of DAM data.
The court of international trade has issued its final decision. This decision could theoretically be challenged before the US Court of Appeals for the Federal Circuit (i.e. CAFC).
In this litigation, the Department of Commerce is on our side so any decision to appeal rests with US fish industries. They still have time to file an appeal before the CAFC. But, given that the opinion issued by court of international trade is on a factual issue instead of a point of law, there is not a great chance of this decision being reversed.
I also argued before the court in the appeal filed against commerce’s final results in the ninth review recently. The court’s order is expected shortly and we expect the court to remand the surrogate country issue to commerce for a fresh consideration.
Is Bangladesh an acceptable surrogate country for Việt Nam? With your long and vast experience, how do you evaluate the situation? And, what are your suggestions for Viet Nam’s Government, exporters, and US importers and consumers?
Bangladesh continues to be on the list of potential surrogate countries issued by the Department of Commerce’s office of policy. Bangladesh still provides reliable DAMprice data, as well as price data for other inputs. Of course, the anti-dumping proceedings are dynamic, and the facts vary from one period of review to another. Bangladesh is, by no means, a 100% perfect choice – no country is perfect on every issue. But, I believe that Bangladesh continues to be superior to all other countries on the list under a totality of circumstances test.
The Việt Nam Government and exporters, in concert with US importers, should continue to support all efforts to obtain the best surrogate value data from the listed surrogate countries and to work to discredit Indonesia. They also must support law suits in the US federal courts to overturn the doc’s current preference for Indonesia over other surrogate countries, which are economically comparable to Vietnam.
From March 2016, Việt Nam’s fish exports has entered an 18 months transition period. How difficult is this to Vietnam fish exporter? Do you think this non-tariff barrier is legal under current US-Vietnam trade mechanism and agreements?
The new USDA- food safety and inspection service (FSIS) equivalency standards and nationwide inspection and certification regime adds a new obstacle to the free and fair trade. It is widely believed that the leading Vietnamese processors and exporters already follow globally accepted manufacturing practices.
The USDA-FSIS equivalency programme, however, is extremely complex and must be implemented through new laws and regulations adopted by the Vietnamese Government, which must be adopted and followed by each processor. The USDA must also certify the country and individual processors before they will permit entry of fish fillets. This will require significant changes in the way the factories control and inspect inputs, processing and their HACCP plans.
Since the same equivalency and certification requirement is also applicable to US domestic producers, there may not be a violation of WTO’s national treatment rule. However, it is still being examined as to whether the new regulations are in violation of the WTO phytosanitary agreement. No definitive word on that for now.
As you suggest that this is a long fight, what are your suggestions for Việt Nam exporters and US consumers to ensure their own interests prevail?
The Vietnamese processors and Government must work in concert to implement the new USDA-FSIS regulations. US importers and US consumer forums should also be a part of this new push by the Vietnamese Government. — VNS