What is a safeguard duty? What are conditions for applying a safeguard duty in Vietnam?

What is a safeguard duty?

Pursuant to Clause 7, Article 4 of the Law on Export and Import Duties 2016, a safeguard duty is an additional import duty applied in cases where the importation of goods into Vietnam in excessive quantities causes serious damage or threatens to cause serious damage to domestic production or hinders the establishment of domestic production industries.

What is a safeguard duty? What are conditions for applying a safeguard duty in Vietnam? (Image from the Internet)

What are the conditions for applying a safeguard duty in Vietnam?

Pursuant to Clause 1, Article 14 of the Law on Export and Import Duties 2016, the conditions for applying a safeguard duty are as follows:

- The volume, quantity, or value of imported goods increases suddenly in an absolute or relative manner compared to the volume, quantity, or value of similar or directly competitive goods produced domestically;

- The increase in volume, quantity, or value of imported goods as prescribed at point a, Clause 1, Article 14 of the Law on Export and Import Duties 2016 causes or threatens to cause serious damage to the domestic production of similar or directly competitive goods or hinders the establishment of the domestic production industry.

What are the duration and principles for applying a safeguard duty in Vietnam?

Pursuant to Clauses 2 and 3, Article 14 of the Law on Export and Import Duties 2016, the principles and duration for applying a safeguard duty are stipulated as follows:

* Principles for applying a safeguard duty:

- A safeguard duty is applied within the necessary scope and to the necessary extent to prevent or mitigate serious damage to the domestic production industry and to facilitate the enhancement of competitiveness in that industry;

- The application of a safeguard duty must be based on the investigation conclusion, except in the case of applying a temporary safeguard duty;

- A safeguard duty is applied on a non-discriminatory basis and regardless of the origin of goods.

* Duration for applying a safeguard duty:

The duration for applying a safeguard duty is not more than 4 years, including the period of applying a temporary safeguard duty. The application period may be extended for no more than another 6 years, provided that serious damage or the threat of serious damage to the domestic production industry still exists and evidence demonstrates that the industry is adjusting to enhance its competitiveness.

Which authority is competent to apply a safeguard duty in Vietnam?

Pursuant to Clause 3, Article 15 of the Law on Export and Import Duties 2016 which stipulates as follows:

Application of Anti-dumping Duty, Countervailing Duty, and Safeguard Duty

1. The application, change, and removal of anti-dumping duty, countervailing duty, and safeguard duty are performed in accordance with this Law and the laws on anti-dumping, countervailing, and safeguarding.

2. Based on the tax rates, quantities, or value of goods subject to anti-dumping duty, countervailing duty, and safeguard duty, customs declarants are responsible for declaring and paying taxes according to the law on tax administration.

3. The Ministry of Industry and Trade decides on the application of anti-dumping duty, countervailing duty, and safeguard duty.

4. The Ministry of Finance stipulates the declaration, collection, payment, and refund of anti-dumping duty, countervailing duty, and safeguard duty.

5. In case the interests of the Socialist Republic of Vietnam are harmed or violated, based on international treaties, the Government of Vietnam reports to the National Assembly to decide on the application of other safeguard tax measures accordingly.

Thus, the authority competent to apply a safeguard duty is the Ministry of Industry and Trade.

What documents are required to request the application of a safeguard duty?

Pursuant to Article 47 of Decree 10/2018/ND-CP, the documents required to request the application of a safeguard duty are as follows:

- The application dossier for a safeguard duty (hereinafter referred to as the Application Dossier) includes the Application Form for applying a safeguard duty and related documents and materials.

- The Application Form for applying a safeguard duty includes the following contents:

+ Name, address, and other necessary information of the organization or individual representing the domestic production industry;

+ Information, data, and evidence required to identify the representative of the domestic production industry, including a list of domestic organizations and individuals producing similar or directly competitive goods; the volume, quantity of similar or directly competitive goods produced by the organizations and individuals mentioned above;

+ Names, addresses of organizations, and individuals producing similar goods that support or oppose the case;

+ Descriptive information on the imported goods subject to an investigation for safeguard duty application, including scientific name, trade name, common name; composition; basic physical and chemical properties; main use; production process; international and Vietnamese standards and regulations; commodity code according to the Vietnamese Export-Import Goods List and applicable import duty rates according to the export and import duty tariff at each period;

+ Descriptive information on the similar or directly competitive goods of the domestic production industry including scientific name, trade name, common name; basic physical and chemical properties; main use; production process; international and Vietnamese standards and regulations;

+ Information on the volume, quantity, and value of imported goods prescribed at point d, Clause 2, Article 47 of Decree 10/2018/ND-CP in the 3 years preceding the submission of the Application Dossier;

+ Information on the volume, quantity, and value of similar or directly competitive goods of the domestic production industry prescribed at point e, Clause 2, Article 47 of Decree 10/2018/ND-CP in the 3 years preceding the submission of the Application Dossier.

In cases where the domestic production industry has been in operation for less than 3 years, the collected data will include the entire period of operation of the domestic production industry up to the time of submission of the Application Dossier;

+ Information, data, and evidence on serious damage or threats of serious damage to the domestic production industry;

+ Information, data, and evidence on the causal relationship between the import of goods prescribed at Clause d of this point and the serious damage or threat of serious damage to the domestic production industry;

+ Specific requirements regarding the application of the safeguard duty, including the duration and extent of application.