US door still open for Vietnamese catfish exports

Thursday, Apr 19, 2018 09:01

Truong Dinh Hoe

Viet Nam’s tra-basa (catfish) fish exporters will likely find it more challenging to export to the US market after the US Department of Commerce (DOC) imposed high anti-dumping duties on frozen catfish fillets imported from Viet Nam. Vietnam News Agency and Truong Dinh Hoe, general secretary of the Viet Nam Association of Seafood Exporters and Producers (VASEP), discussed some solutions to the new challenges.

What are the main points of the DOC’s 13th administrative review of the anti-dumping duties on Viet Nam’s frozen catfish fillets (POR 13)? How is it different from the previous review?

This is the thirteenth time Vietnamese enterprises have been subject to the DOC’s review of tariffs for shipments exported between August 2015 and July 2016 to decide the final tax rate for these shipments.

The new point in this review is that this is the first time that businesses exporting catfish to the US have to declare new production factors for the DOC to consider. This time, only one company – Go Dang Seafood Joint Stock Company (Godaco) – was called up for review instead of two companies as in the previous reviews.

Therefore, the tariff rate adopted for Godaco will be used as the average tax rate applied for the remaining exporters during the POR 13.

In your view, what aspects of the DOC’s 13th final decision are irrational?

Firstly, the tax rate assigned to the mandatory respondent, Godaco, is much higher than the standard US rate, while normally the national tax rate is the highest a tax rate can be set in an administrative review.

Specifically, a tax rate of US$3.87 per kilogramme is unreasonable compared to the standard US tax rate of just $2.39 per kilogramme.

Secondly, the tax imposition on Godaco this time was determined based on Godaco’s biggest disadvantages. The DOC did not consider all of Godaco’s records but used the previous case law to examine shortcomings which resulted in a higher national tax rate. Meanwhile, DOC should have considered this was the first time Godaco has to declare the production factors in accordance to the new standards.

Thus, DOC did not review the imposition of tax sufficiently, as well as it did not take account of the elements of declaration procedures in the process.

The third unfair point was that usually, the tax rate calculated from the available unfavorable factors is not included in the average tax rate imposed on the companies which are not mandatory respondents, or in other words the companies are not entitled to have a separate tax rate. This is an absurd imposition and not included in previous anti-dumping duty reviews.

Based on previous experience with handling anti-dumping lawsuits, what will VASEP do with the DOC’s 13th ruling?

We follow the procedure. If the DOC’s ruling is not completely reasonable, Vietnamese enterprises can file a lawsuit with the US Commercial Court. This court will review the tax calculation method, DOC’s calculation method and data. On that basis, it will request DOC make appropriate adjustments.

Viet Nam has made similar complaints many times before and eventually, DOC has adjusted to a lower tax rate. For that reason, VASEP also expects that complaints of Vietnamese enterprises this time will have the same results and DOC will have to recalculate the fair and rational tax rate.

Godaco has filed a lawsuit with the US Commercial Court, requesting a review of DOC’s tax calculation for the company. In addition, the remaining businesses also sent complaints to the US Commercial Court, asking for a review of the imposition of a separate tax rate of $3.87 per kilogramme, which is higher than the national tax base. From then, DOC will likely have to make fair and proper adjustments.

Could you predict some scenarios that could happen as a result of the complaints to the US Commercial Court?

Such lawsuit can last about from a year and a half to two years. And we can be confident that the incomplete tax review for Godaco’s record will be re-evaluated, so Godaco may be subject to a lower tax rate, which will lead to lower tax applied for the remaining firms.

In addition, the tax calculation method based on the adverse factors available for Godaco will also be reviewed. This is likely to have a good result and better tax rates for other Vietnamese businesses. Thus, the “door” to the US market is still open for Viet Nam’s catfish exports.

What are fundamental solutions for Viet Nam’s aquaculture industry, as well as processing and exporting of Vietnamese catfish in particular, as protectionism emerges worldwide?

In the global integration process, in order to export aquatic products to foreign markets, enterprises must comply with the requirements on quality, food hygiene and safety.

In my opinion, Vietnamese businesses have been focusing on improving the fisheries production chain, from seed production to cultivation, processing and exporting. Over the past years, many companies have been awarded international certificates, qualified to export catfish fish to high-end markets such as the United Sates, EU, etc.

Therefore, to maintain the export market share, the most important prerequisite is still quality. Besides, the price of products is also a key factor. Many companies have updated technology in the value chain, thus the production cost should be further optimized to compete with other aquatic products such as whitefish, tilapia or American catfish.

What is your forecast for Viet Nam’s export turnover in 2018, including export value of catfish if the DOC’s 13th ruling is implemented?

In the first quarter of this year, catfish export turnover reached $400 million, up 7 per cent over the same period of last year. This is a good signal in the context that Viet Nam is facing the US high tax rate. This result showed that Vietnamese enterprises are actively seeking new and alternative markets when unfavorable signs arise from the US market.

In addition, VASEP is seeing a recovery in the EU and South America, as well as good growth in the Chinese market with increasing demand for high value products. This shows that Vietnamese catfish is still attractive in the world market.

The remaining problem is to balance the demand and supply according to market demand. If it is done well, Viet Nam’s tra fish export in 2018 will achieve its target of over $1.8 billion. – VNS

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