In the field of trade remedies, there are three basic cases that the competent authorities can apply in the field of trade remedies to protect the interests of domestic producers and the stable development of the domestic industry, which is anti-dumping, anti-subsidy and applying safeguard measures.
The term trade remedy is a commonly applied term to refer to the measures taken by national governments, through their Trade Remedies Authority (Trade Remedies Administration, Ministry of Industry and Trade of Vietnam), to protect the stable development of the domestic economy, avoiding influence from external factors.
These measures are covered by three separate World Trade Organization (WTO), being the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (commonly known as the Antidumping Agreement); the Agreement on Subsidies and Countervailing Measures; and the Agreement on Safeguards.
Measures in the Anti-Dumping and Subsidies Agreement allow a WTO member to deny Most Favored Nation (MFN) treatment to specific goods of another WTO member for a period of time and subject to certain procedures.
Anti-Dumping
Dumping occurs when foreign goods are sold to an importer at a price lower than that of the like good in the exporting country or when foreign goods are sold to an importer at a price less than the total production of that good.
Selling at a price below the market price of the similar product has the potential to cause serious damage to the domestic industry of the importing country, thereby affecting the stable operation of the economy.
In response to this situation, countries can apply anti-dumping duties, placing additional duties on exported manufactured goods that are determined to be dumped in the domestic market. At that time, enterprises subject to high duty will find it difficult to maintain low product prices and thereby, reduce their exports to countries that have imposed anti-dumping duties on their products.
The trade remedy authority of the country imposing the duty will conduct periodic reviews in accordance with local laws and international treaties to consider increasing duties, reducing duties or terminating the application of anti-dumping measures.
Anti-Subsidy
Subsidized goods are goods that benefit from financial support from foreign governments to increase their competitiveness with domestically produced goods, affecting the interests of domestic producers and the development of the economy.
Some examples of foreign government financial assistance may include loans with favorable interest rates, exemptions, and duty incentives. Subsidies on imported goods, when causing injury to producers in the importing country, can be offset by the imposition of countervailing duties, anti-subsidy duties.
This policy may include the imposition of duties, penalties or import restrictions on products protected or favored by subsidies.
The purpose of anti-subsidy policy in trade remedies is to ensure fair competition and protect the interests of domestic industry. However, this policy can also cause controversy and affect trade relations between countries.
Safeguards
Safeguards are the third trade remedy measure under WTO rules. The WTO Safeguards Agreement considers cases where a party exports a product to a country that is likely to cause injury or has caused serious injury to its domestic industry.
Accordingly, in the event that the investigating authority determines that there is a possibility of causing serious damage to the domestic industry, the trade remedy authority of that country may consider applying safeguard measures, including: special import duties or import quotas on imported goods.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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