Caught out: locals to face the music for trade fraud

A US official said the CBP report on transshipment had been completed and was being reviewed.
The official said the bilateral agreement on textile and clothing (ATC) allowed consultations if the US identifies transshipment.
The US is hoping to consult with Vietnam “shortly” on the findings of the report.
Deputy Minister of Industry, Bui Xuan Khu, said there was evidence a small number of local garment and textile enterprises had taken advantage of the current transitional period to provide counterfeit customs documents or certificates of origin to export products made elsewhere as being made in Vietnam.
The ATC, which was signed early last year, grants the Vietnamese garment and textile sector an initial quota of $1.7 billion, with a 7 per cent rise to this year.
The Vietnam National Textile and Apparel Association (Vitas) estimated 1,000 garment and textile firms nationwide had been granted part of the overall quota.
“Such a large number of enterprises have been granted quotas that it is foreseeable that we should have some problems,” Khu said, adding that there was not yet an automatic network connection between US Customs and the US Ministry of Trade and their Vietnamese counterparts.
He said to avoid punishments applying to legitimate enterprises, the government had appointed the Ministry of Trade to conduct face-to-face meetings with the US delegation in order to settle the issue, while permitting Vitas to hire a US law firm to protect Vietnamese interests in case of a dispute.
Senior Ministry of Planning and Investment economist, Le Dang Doanh, said there were three steps which could be taken depending on the outcome of the meetings and the severity of the violation.
The first step could be punishment of enterprises in violation of the agreement, the second could be a reduction in the industry’s overall quota and the third could be reconsideration of the agreement.
However, a senior Ministry of Trade official told Vietnam Investment Review he was certain Vietnam would successfully prove that the quota allocation mechanism complies with international rules and requirements for transparency.
“Despite the fact that no specific decision has been made, it is likely the US will fine Vietnam for the violation of the trade agreement by some enterprises and require the Vietnamese government to deal with the violating enterprises.”
He revealed the fine would likely be in the realm of $1.5 million.
“The fine wouldn’t be in cash, but it is possible that Vietnam would suffer the withdrawal of a part of the

quota equivalent to the fine,” he said.
Enterprises found in violation of the agreement would be punished by the loss of their business licences.
“This is a lesson for Vietnam in its transition towards a market economy and its international integration process,” he said, adding that to avoid trade fraud in future, Vietnamese Customs and the Ministry of Trade would establish a network connection with their US counterpart, allowing automatic access to relevant licence and quota information to both sides.
The Ministry of Trade is conducting negotiations with the US side for the extension of the two-year textile agreement until Vietnam joins the WTO in 2005.
However, it is rumoured that the US is considering exempting Vietnam from the quota mechanism, despite the fact that the country will not be a WTO member, as other main exporters to the US, such as China, India and Bangladesh, which are WTO members, would be exempted from the quota mechanism as of early 2005.
At present $2 billion of Vietnam’s total $70-80 billion in apparel exports go to the US market.