Currently, enterprises are importing Chinese plywood to re-process and then sell to the US; even foreign enterprises disguise as investors in Vietnam to get certificates of origin of goods (C/O) to export plywood to the US to evade taxes.
"Disguise" as investor to get C / O to export the US
The Ministry of Industry and Trade has recently sent a document to the Prime Minister on strengthening the management of plywood exports to the US.
According to the Vietnam Timber and Forest Product Association (Vifores) provided to the Ministry of Industry and Trade, in 2018, plywood exports to the US market reached 320,000 m3, five times higher than 2017. Imports of plywood and pieced wood gained 450,000 m3, up nearly 20 percent compared to 2017.
Meanwhile, Vietnam's plywood output in 2018 updated by Vifores based on preliminary data of the total capacity of 36 factories reported to the association was more than 1.4 million m3, an increase of over500,000 m3 compared to 2017.
This increase was due to the establishment of six new factories and expansion of design capacity of other factories. However, based on plywood production and export data, Vifores also raised a question on the export volume of plywood products that differs from the industry's designed capacity; about 500,000 m3 due to trade.
Shortly thereafter, in the combat against trade and origin fraud of plywood, the General Department of Customs quickly inspected and focused on four companies provided by Vifores.
“Currently, the General Department of Customs has also directed the Anti-Smuggling and Investigation Department to deploy the theme of fighting smuggling, trade fraud and origin of plywood products. The customs authority has also listed the four companies into red channels to strengthen the management and strictly control the import and export procedures of wood of these companies in the list provided by Vifores,” stated the Ministry of Industry and Trade.
In a report to the Prime Minister, the Ministry of Industry and Trade included the assessments and comments by the Department of Economic Security (Ministry of Public Security).
Accordingly, the Department of Economic Security recently inspected and provided the Ministry of Industry and Trade with information on production and business activities of some plywood companies. The department confirmed it was true that Vietnamese companies imported plywood from China, then re-processed it and sold it to other companies to export to the US.
In addition, there was a situation that foreign companies disguised themselves as investors in Vietnam to get C/O to export plywood to the US market to avoid taxes.
Increasing risk of origin fraud
The Ministry of Industry and Trade stated that the levy of anti-dumping tax, anti-subsidy tax and import tax of 10-25 percent by the US on the Chinese imported woods has increased the risk of origin fraud, which might harm Vietnam's plywood production and processing.
The ministry stated that there were signs of trade fraud and taking advantage of investment activities to disguise Vietnamese origin for plywood goods to export to the US. The plywood exports to the US surged in 2018 and in the first months of 2019, which partly reflected the above statement.
To prevent this situation and legitimate companies, the Ministry of Industry and Trade proposed the Prime Minister assign the ministry to formulate a circular stipulating the suspension of the business of border gate transfer and temporary import for export of plywood into Vietnam and then re-exported to the US.
The Ministry of Industry and Trade was assigned to build a voluntary declaration program for plywood companies and manufacturing establishments for export to the US to improve the management efficiency of Vietnamese and US management agencies for plywood production and business.
In addition, the Ministry of Industry and Trade is also expected to develop a circular stipulating that traders exporting plywood to the US must register the exporter code (according to the mechanism of registration and declaration of production capacity of manufacturing establishments of companies or suppliers).
In addition, the Ministry proposed the Prime Minister assign the National Steering Committee for combat against smuggling, trade frauds and counterfeit goods (National Steering Committee of 389) to work with other ministries and sectors and the Chamber of Commerce and Vietnam Industry (VCCI), localities and associations to inspect, monitor, combat, prevent and handle violations, trade frauds, origin fraud, illegal transit of plywood manufacturing, trading, importing and exporting companies in the whole country, as well as commodities at risk of origin fraud and illegal transit.
According to the General Department of Customs, exports of plywood and pieced wood (HS code 4412) to the US in 2018 (mainly plywood) reached US$189.6 million, up 270 percent in value compared to 2018. In the first three months of this year, exports of this item reached $46.7 million, up 95 percent in value over the same period in 2018. Currently, the US and South Korea are Vietnam’s two largest export markets for plywood.
Source: VCN
Key words: Chinese goods, disguised as, Vietnamese goods, export, US, three ministries, worried
