NOTE: The following report appears in both International Trade Today and Export Compliance Daily.

Vietnam Customs Continues Crackdown on Transshipment, Hopes for Cooperation Agreement With CBP

September 6, 2019 by Brian Feito|International Sources

Vietnam continues efforts to crack down on the country of origin fraud and transshipment schemes that have become especially more frequent since the ramping up of U.S.-China trade tensions, according to reports in CustomsNews, the self-described “mouthpiece” of Vietnam Customs.

Current concerns focus on plywood, following the U.S. imposition of antidumping and countervailing duties on plywood from China, according to a Sept. 5 report. Vietnamese exports of plywood to the U.S. have quintupled since 2017, while imports of plywood into Vietnam are up 20 percent. Meanwhile, Vietnamese production capacity is only up about 50 percent, CustomsNews said. Foreign companies are in some cases disguising themselves as investors to fraudulently obtain certificates of origin.

Vietnamese authorities are proposing to suspend temporary imports for export of plywood into Vietnam and then to the U.S., the report said. The Ministry of Industry and Trade will put in place a voluntary declaration program, and "is also expected to develop a circular stipulating that traders exporting plywood to the US must register the exporter code."

Vietnam's actions against plywood are reportedly part of a broader effort to clamp down on transshipment schemes. The country’s central customs agency on Aug. 13 issued an “official letter” directing Vietnam’s municipal and provincial customs authorities to strengthen measures related to the inspection and verification of country of origin, and held a meeting to follow up on Aug. 23, according to one report.

Vietnam also hopes to sign a customs cooperation agreement with the U.S. that could help address the issue, according to another report. “In the future, when the Cooperation Agreement is signed, it will be an opportunity for the Customs authorities of the two countries to deploy cooperation, including exchanging information on goods originating from Vietnam to the U.S.,” CustomsNews said. “Vietnam Customs wishes to develop a memorandum of understanding on anti-origin fraud, illegal transit and implement immediately after signing the agreement.”

A customs cooperation between the U.S. and Vietnam has "been in the works for some time," said Bob Thommen, CBP attache to the U.S. embassy in Bangkok, Thailand. "Basically, we’re still working on it," he said, declining to give a time frame for completing the deal.

According to the report, Vietnamese officials are concerned that illegal transshipment schemes through the country to avoid trade remedies could cause affected importing countries to investigate Vietnamese exports and subject them to antidumping, countervailing and safeguard duties. “This damages Vietnamese manufacturers, hurts their prestige in the international market and restricts exports to these markets,” CustomsNews said.

Vietnam Customs has reportedly been working since at least June to address country of origin fraud issues and transshipment schemes (see 1906130028). Commerce recently ordered aluminum extrusions from Vietnam subject to AD/CV duties on China after issuing a final determination of circumvention (see 1908090039), and in 2018 did the same for Vietnamese corrosion-resistant and cold-rolled steel (see 1805220030). Commerce is currently investigating allegations that corrosion-resistant and cold-rolled steel from Vietnam is circumventing AD/CV duties on South Korea and Taiwan (see 1907050052).