Vietnam has come out top in a legal wrangle with the world’s largest economy over shrimp import anti-dumping tariffs.
Last week the World Trade Organization (WTO) ruled in favour of the Southeast Asian nation saying that the US had violated global trade rules in employing its ‘zeroing’ method to inflict anti-dumping tariffs on shrimp exports from Vietnam.
“The United States has acted inconsistently with provisions of the Anti-Dumping Agreement and of the General Agreement on Tariffs and Trade (GATT) 1994. We recommend that the United States bring its measures into conformity with its obligations under those agreements,” said the WTO’s report into the matter.
Under WTO’s regulations, the two sides can appeal against its decision within 60 days.
“This is quite good news for Vietnam. I’m quite impressed by this victory. Vietnam’s exports will see a better position in the world’s market,” said Belgium-based law firm Gide Loyrette Nouel A.A.R.P.I’s partner Oliver Prost.
“The WTO’s decision has given Vietnam its first victory in such a lawsuit. It paves the way for larger exports of Vietnamese shrimps into the US market,” said Dinh Thi My Loan, chairwoman of Vietnam Chamber of Commerce and Industry’s Trade Remedies Council.
The decision was the latest of a series in which zeroing - a framework for calculating duties on goods sold at less than their price on the exporter’s home market - was found illegal under WTO agreements, Reuters reported.
WTO rules allow countries to impose duties on imports that they determine to be dumped to be damaging sales by their domestic producers, but calculating duty levels involves comparing batches of goods.
In zeroing, US officials do not take into account cases in which the imported goods are cheaper on their home market but applies an across the board duty rate based only on those that are more expensive at home.
“The US zeroing methodology, as such, as it relates to the use of simple zeroing in administrative reviews, is inconsistent with the United States’ obligations under Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994,” said the WTO report.
Thus zeroing has increased Vietnamese products’ dumping margin and pushed taxes up. This has led to big losses to Vietnam’s exporters, according to the Vietnam Association of Seafood Exporters and Producers. The US inflicts anti-dumping tax levels on Vietnamese shrimp exporters ranging from 4.13 per cent to 25.76 per cent.
The US first filed a lawsuit against Vietnam’s shrimp exports in 2003, claiming Vietnam’s shrimps were being dumped in the US. But in February 2010, Vietnam brought the shrimp case against the US to the WTO.
The trade dispute sought to defend the place of a product that fetches Vietnam $1.5-1.7 billion in export turnover every year.
However, Oliver Prost said this victory did not mean Vietnam would dodge similar international lawsuits in the future, given the world’s economic difficulties were forcing many markets to apply trade barriers to imported products.
For example, the European Union (EU) tended to impose trade defence instruments, including safeguards and anti-dumping and anti-subsidy measures on imports from emerging countries like Vietnam, he said.
“There has been growing demand within EU for protection against trade distortions at the international level,” he said. Specifically, the EU would apply dual pricing, differential export tax, stricter social and environmental norms and stricter regulations on chemical products and hazardous materials on goods imported into this market.