US initiates an investigation into Việt Nam's export of wooden cabinets

May, 11/2022 - 07:06

The Ministry of Industry and Trade (MoIT) announced the US is initiating an investigation against defensive tax evasion on wooden cabinets imported from Việt Nam.

HÀ NỘI — The Ministry of Industry and Trade (MoIT) announced the US is initiating an investigation against defensive tax evasion on wooden cabinets imported from Việt Nam.

The Viêt Nam Timber and Forest Products Association said the US Department of Commerce (DoC) had notified Vietnamese authorities of an application to investigate suspicions of trade remedy tax evasion on wooden cabinets imported from Việt Nam and Malaysia.

Accordingly, the product proposed for investigation against trade remedy tax evasion is wooden cabinets with HS codes 9403.40.9060, 9403.60.8081 and 8403.90.7080. The plaintiff was the American Kitchen Cabinet Alliance, representing a number of US wood cabinet manufacturers.

According to the association, the US issued an order to impose anti-dumping and anti-subsidy taxes on the same products originating from China in February 2020. Since then, exports of these products from China to the US have plummeted by 54 per cent from $2.5 billion to $1.6 billion.

Meanwhile, the export of wood products, from Việt Nam to the US, increased by more than 130 per cent from $1.37 to $2.7 billion. At the same time, the volume of imports of these products from China into Việt Nam also increased nearly four times from $232 million to $810 million.

In this case, a representative of the Việt Nam Timber and Forest Products Association said: "The US business side alleges that Vietnamese enterprises have imported cabinet parts from China that are subject to trade remedy tax, then fully assembled in Việt Nam and exported to the US." 

He said the US business side proposed its Ministry of Commerce extend the current tax order on wooden cabinets originating from China assembled in Việt Nam and exported to the US. 

DoC concludes that if the product range is not extended, the plaintiff proposes an investigation against trade remedy tax evasion with wooden cabinets imported from Việt Nam.

It is expected that the US Department of Commerce will decide to initiate an investigation by the end of May, so the association recommended that timber exporters should keep updated on proceedings.

Currently, the US is the largest import market for Việt Nam's agricultural, forestry and fishery products. In the first four months of the year, the export of wood and wood products to the US market was estimated at $3.3 billion, accounting for 68.2 per cent of the turnover of Việt Nam's agricultural, forestry and fishery products exported to this market.

According to the MoIT’s Trade Remedies Administration, in the period of 2019-2021, after the US imposed tariffs on China, imports of products subject to investigation from China into the United States decreased, exports from Việt Nam to the US increased, and the volume of imports from China into Việt Nam rose sharply.

Regarding other imported timber products from Việt Nam, DoC announced an extension of the time to issue the final conclusion on the anti-dumping and anti-subsidy tax evasion investigation case with hardwood plywood from Việt Nam. Accordingly, the DOC is expected to issue its final conclusion on October 17, 2022, instead of April 20, 2022, as previously announced. This is the DOC's third renewal of this content.

The case was initiated by the DOC to investigate on June 17, 2020, at the request of the US Customs Service (CBP) with two contents on the scope inquiry and the anticircumvention.

In the scope inquiry, DoC will keep the investigation to determine if hardwood plywood imported from Việt Nam into the US was within the scope of products subject to tariffs, considering five factors including investment level of manufacturing and exporting enterprises, level of investment in research and product development, manufacturing process in Việt Nam, size of production facilities in Việt Nam and the value-added portion of the product made in Việt Nam.

The objective of an anti-circumvention investigation by the US was to ensure the effectiveness of the enforcement of trade remedies that are being applied to Chinese products. In case Việt Nam plywood manufacturers and exporters can prove that they have not evaded trade remedies that the US is applying to China, they will not be subject to anti-evading tax. — VNS