Trade defence as the shield to protect enterprises

If the international economic integration process can be compared to a large stream taking Vietnamese goods to the world and bring foreign goods to the Vietnamese market, then trade defence is the shield to protect the legitimate interests of domestic enterprises.

A steel factory in Vietnam
A steel factory in Vietnam

Proactive response

Vietnam has opened the domestic market for goods from 51 partner countries under free trade agreements.

Director of the WTO Centre at the Vietnam Chamber of Commerce and Industry (VCCI) Nguyen Thi Thu Trang stated that Vietnamese manufacturers are ready to accept competition from foreign goods, and this is considered a good opportunity to enhance their capacity.

But amid the Covid-19 pandemic, there will be a surplus of certain goods, which are directed to Vietnam in one way or another. In this situation, trade defence instruments, including anti-dumping, anti-subsidy and safeguard measures, are effective tools to defend the legitimate interests of domestic producers against unhealthy competition, emphasised Trang.

According to the Ministry of Industry and Trade (MOIT), the number of cases involving trade defence has been growing in recent years, not only reflecting the greater competition between domestic and foreign goods but also domestic producers’ enhanced capacity in proactively opting to use trade defence instruments to protect their legitimate interests.

In 2015, Vietnam launched only two investigations into and imposed trade defence measures on cooking oil and stainless steel. Then, since 2016, the MOIT has initiated 19 cases and imposed trade defence measures to protect domestic manufacturing activity.

Trade defence measures are said to have helped implement the policy of developing some domestic manufacturing sectors, specifically protecting the jobs of nearly 150,000 people. It is estimated that these sectors contribute nearly 6% of Vietnam’s GDP. By increasing tariffs on imported goods, trade defence measures have raised the government revenue by trillions of Vietnamese dong.

Furthermore, thanks to trade defence measures, some enterprises have improved their business situations considerably. At the same time, many domestic enterprises have managed to bolster their exports after trade defence measures were imposed.

Acting Chairman of the Vietnam Sugar and Sugarcane Association Nguyen Van Loc said that as Thai sugar was imported to Vietnam in large quantities, seriously affecting domestic production, the MOIT’s recent move to take trade defence measures was timely, helping to partly remove the difficulties facing domestic sugar producers.

Promoting domestic enterprises’ internal strength

Amid the complicated developments of global trade, impacts of the Covid-19 pandemic and the fast-growing value of Vietnam’s export-import activities, enterprises need to consider trade defence measures as part of their business strategies in order to create an equal competitive environment, said Le Trieu Dung, the director of the Trade Remedies Authority.

Under a decision on enhancing the trade defence capacity of domestic manufacturers in the context of free trade agreements, the MOIT outlines a range of measures with the coordination of associations, ministries and agencies to provide regular and in-depth information on the matter so that enterprises can proactively use trade defence instruments to cope with the mass import of goods into Vietnam.

Chairman of the Vietnam Steel Association Nghiem Xuan Da stated that one of the factors that will help Vietnamese enterprises confidently walk out onto the international playing field is investing in modern technologies. In addition, many enterprises are proactively relying on their strengths in production and operation to diversify their markets so as to minimise the risks in international trade.

An economist once said that free trade is never free. What are not free are the trade defence measures put up by import countries to legally defend domestic manufacturing. But the important thing is that enterprises need to work closely with the competent authorities to, along with enhancing their capacity, employ this tool in a flexible and effective manner as a shield to protect the development of domestic manufacturing.