USAID supports Vietnam in efforts to prevent trade fraud

USAID Trade Facilitation Program Director Claudio Dordi said origin fraud and illegal transshipment will increase the risk that compliant Vietnamese traders will face slower export procedures in the US, as well as higher customs duties. In addition, other countries will also be vigilant over Vietnamese goods.

Dordi said there are various ways to commit trade fraud, such as simple transshipment to Vietnam without physical modification of the product, and exporting disassembled products to Vietnam where simple assembly operations are carried out.

The General Department of Vietnam Customs has pointed out 15 groups of goods at high risk of trade fraud and counterfeiting of certificates of origin (C/O), including garments and textiles; leather, footwear, and handbags; computers; electronics and components; electrical appliances and components; phones and components; aluminum and its products; iron and steel and its products; bicycles, electric bicycles and spare parts; wood and wood products.

Tax punishments

To prevent origin fraud and illegal transshipment, businesses will be subject to tax punishment. Specifically, violators will be subject to retrospective collection of anti-dumping and anti-subsidy taxes. In case of a serious violation, criminal charges may be filed. US customs offices not only look at exporters’ records and documents, they also contact agencies that issue the documents for consignments to check their accuracy. Since actual inspection of entire consignments to the US is not feasible, US customs offices apply a risk management mechanism.

To fight against foreign goods carrying made-in-Vietnam labels, the Vietnamese government has taken strong action to ensure the reputation and value of made-in-Vietnam goods.

The prime minister issued Decision 824/QD-TTg approving a project for strengthening state management in preventing the evasion of trade remedies and origin fraud.

In addition, the General Department of Vietnam Customs has issued guidance and instructions to all local customs departments to inspect and accurately determine the origin of goods, as well as identify and investigate illegal transshipment.

Many initiatives have also been deployed to increase awareness of these issues among import-export firms and business associations. To complement current efforts, the Ministry of Finance and the Ministry of Industry and Trade have been committed to taking more proactive steps to promote interagency cooperation in inspecting, determining, and identifying the origin of exported and imported goods once suspicions arise of fraud or illegal transshipment.

High fraud risk commodities

However, customs departments need to identify and analyze import-export statistics and other information sources to determine the list of key commodities at high risk of trade fraud and C/O counterfeiting, strengthen cooperation with domestic and foreign organizations to prevent violations, and promote information through media agencies.

USAID’s Vietnam Mission Director Michael Greene said that through the five-year Trade Facilitation Program, USAID is supporting Vietnam in adopting and implementing a risk management approach to customs and specialized inspection agencies, which will strengthen the implementation of the World Trade Organization’s Trade Facilitation Agreement, of which both Vietnam and the US are members.

The USAID Trade Facilitation Program is cooperating with the General Department of Vietnam Customs, the Ministry of Industry and Trade, and the Vietnam Chamber of Commerce and Industry to address origin fraud, illegal transshipment, and the evasion of trade remedies. It will also promote and encourage a more effective partnership between government entities and customs departments at both the central and local levels and the business community.