When shall the Minister of Industry and Trade of Vietnam decide the retroactivity of countervailing duties?

What is countervailing duty?

According to Clause 6, Article 4 of the Law on Export and Import Duties 2016, countervailing duty is an additional import duty applied when subsidized goods are imported into Vietnam, causing or threatening to cause significant damage to the domestic industry or impeding the establishment of a domestic industry.

When shall the Minister of Industry and Trade of Vietnam decide the retroactivity of countervailing duties?

Based on the provisions of Clause 4, Article 89 of the Law on Foreign Trade Management 2017, the application of countervailing duty retroactively is implemented as follows:

Application of Countervailing Measures

1. The temporary application of countervailing duty is decided by the Minister of Industry and Trade based on the preliminary determination of the Investigating Authority. The temporary countervailing duty must not exceed the subsidy level determined in the preliminary result.

The period for applying temporary countervailing duty must not exceed 120 days from the effective date of the decision to apply temporary countervailing duty. The Minister of Industry and Trade may extend the application period but not beyond 60 days.

2. The application of commitment measures is implemented as follows:

a) After the preliminary conclusion and before the end of the investigation, the organizations, individuals producing, exporting investigated goods, or the government providing subsidies may propose commitments to the Investigating Authority to voluntarily cease subsidies, reduce subsidy levels, commit to adjust export prices, or apply other suitable measures;

b) The Investigating Authority may accept, decline, or suggest adjustments to the commitments based on consultations with organizations, individuals representing the domestic industry.

3. The application of countervailing duty is implemented as follows:

a) If no agreement is reached according to Clause 2 of this Article, upon the completion of the investigation, the Investigating Authority will announce the final determination concerning the investigation issues as stipulated in Article 88 of this Law. The final determination and the main bases for it must be notified in an appropriate manner to the related parties;

b) Based on the final determination of the Investigating Authority, the Minister of Industry and Trade will decide whether or not to apply countervailing duty;

c) The level of countervailing duty must not exceed the subsidy level found in the final determination;

d) The duration for applying countervailing duty is not more than five years from the effective date of the decision to apply the duty, unless extended as stipulated in Clause 2, Article 90 of this Law.

4. The retroactive application of countervailing duty is implemented as follows:

a) If the final determination of the Investigating Authority identifies significant damage or a threat of significant damage to the domestic industry, the Minister of Industry and Trade may decide to apply countervailing duty retroactively;

b) Retroactive countervailing duty may be applied to goods imported within 90 days prior to the application of temporary countervailing duty if these goods are found to be subsidized; the volume or quantity of subsidized imported goods into Vietnam rapidly increases remarkably during the period from the initiation of the investigation to the imposition of temporary countervailing duty and causes non-recoverable damage to the domestic industry.

5. The application of other countervailing measures is carried out in accordance with international agreements to which the Socialist Republic of Vietnam is a member or based on principles of international law.

Therefore, the Minister of Industry and Trade can decide to apply countervailing duty retroactively if the final determination of the Investigating Authority identifies significant damage or a threat of significant damage to the domestic industry.

Retroactivity of the countervailing duties in Vietnam (Image from the Internet)

What factors are used for determination of significant damage to the industry in Vietnam?

The determination of significant damage to the domestic industry is based on considering the factors stipulated in Clause 1, Article 23 of Decree 10/2018/ND-CP as follows:

- The absolute or relative increase in the volume or quantity of dumped or subsidized goods imported into Vietnam compared to the volume or quantity of similar goods produced domestically or consumed in the domestic market;

- The price undercutting or price suppression impact of the investigated imported goods on the selling price of similar goods produced domestically;

- The impact of dumped or subsidized goods on the operational status of the domestic industry's production, including the actual decline or potential decline in revenue, sales volume, profit, production output, market share, capacity, productivity, investment; factors affecting domestic selling price; the magnitude of the dumping margin, subsidy level; and adverse actual and potential effects on cash flow, inventory, labor, wages, financial mobilization capacity;

- Other influencing factors.