Explosion of Goods Origin Frauds in Vietnam

Effective free trade agreements (FTAs) have helped Vietnamese goods enjoy preferential treatment when exporting to many other markets. However, the implications also come when many items are facing the problem of goods origin fraud.

Frauds in goods origin

Vietnamese enterprises are facing the problem of many items including artificial stone, wood, iron, steel … being on the watch list and investigated by the US against anti-dumping.

According to the recent announcement of the Prime Minister, fraud, counterfeiting of origin, labeling of goods in contravention of regulations, and illegal transportation of exported and imported goods, have been greatly affecting the production and business activities of genuine companies, causing irreparable damage to the country’s economy.

Counterfeiting of origin and evading trade remedy measures for Vietnam’s goods are constantly increasing, with more and more sophisticated forms and tricks including counterfeiting Vietnamese origin for domestic consumption and counterfeiting Vietnamese origin for export. Goods items at risk of fraud and origin fraud include computers, electronic products and components; phones and components; aluminum and articles thereof, etc.

The reason behind this problem, first of all, is the legal corridor which has not kept up with the actual situation. Regulations on origin of some items are still loose. The regulations on checking dossiers of application for C / O are not tight. The law on origin has not been specific and comprehensive while sanctions are not strict enough to deter and prevent frauds. Some businesses have taken advantage of the loophole of the law on documents proving the origin of goods or the issuance of other certificates similar to C / O to commit frauds.

Mr. Tran Huu Linh – General Director of the General Department of Market Management (Ministry of Industry and Trade) said that, recently, the Import-Export Department (the Ministry of Industry and Trade) repeatedly sent documents to the General Department of Market Management on suspicion of C / O fraud. Through inspection, businesses explained that they needed C / O urgently, otherwise their partners would cancel orders.

In addition, another reason is that businesses are taking advantage of importing countries to apply the policy of self-certification of origin. Some countries (including the US) allow exporters to declare and self-certify the origin of goods, thus causing frauds to occur outside Vietnam’s territory.

Deputy Minister of Industry and Trade Tran Quoc Khanh shared that the US allows exporters to self-certify the origin of goods, which means that goods that are not of Vietnamese origin can also be certified from Vietnam. Goods origin fraud is only discovered in post-inspection. This has been repeatedly warned by the Ministry of Industry and Trade. Although it is not the fault of Vietnam, it is more or less affecting Vietnamese goods.

Strengthening the management of origin fraud

Facing the explosion of goods origin fraud, the Ministry of Industry and Trade is requested to urgently acquire, complete and submit to the Government a draft resolution on a number of urgent measures to enhance state management in the field of origin fraud prevention.

Recently, the Ministry of Industry and Trade has drafted and issued a draft circular regulating how to identify products and goods that are of Vietnamese origin, and consulted with ministries. The draft clarifies that goods temporarily imported for re-export or goods transited through Vietnam must not be shown as Vietnamese goods on the goods labels and / or on any documents and articles that contain information related to them. This is a regulation to prevent trade fraud, including origin fraud causing adverse effects on Vietnamese goods. With this provision, the authorities will have more bases to fight against commercial fraud.

Facing the risk of plywood products that might cross Vietnam before entering the US market to avoid tax, the Ministry of Industry and Trade issued Circular No. 22/2019 / TT-BCT dated November 12, 2019 providing for the suspension of border-gate trading and trading in temporary import of plywood into Vietnam for re-export to the US. The objective is to strengthen the management of plywood exports to the US to prevent trade frauds on the origin of goods and illegal transshipment which lead to the risk that the US may apply tightening management measures to Vietnam’s plywood exports, negatively impacting domestic production.

The Ministry also regularly discusses and asks C / O issuers to strengthen inspection and supervision of C / O issuance, pay special attention to a number of high-risk products including solar cells, automobile tires, pistachios, shrimp, aluminum, steel, plywood, ceramic tiles, electric bicycles, etc. At the same time, the Ministry also actively organizes inspection teams to verify production facilities of enterprises when there is a suspicion of origin fraud; provides timely training and guidance on the origin of goods and encourages enterprises to coordinate in providing information to management agencies when they show abnormal signs, avoiding affecting the country’s manufacturing industry.