Rising trade defence measures expected this year

Last year continued to fuel Vietnam’s export growth; however, this has also subjected the country’s products to growing protectionist measures, notably the increased use of trade defence mechanisms, thereby posing significant challenges for exporting enterprises.

Nguyen Yen Ngoc, Head of Foreign Trade Defense Department, Trade Remedies Authority of Vietnam

As of the end of 2024, Vietnamese export goods encountered approximately 273 trade defence investigations initiated by foreign markets. According to the Ministry of Industrial and Trade (MoIT) records, 25 markets have undertaken such investigations against Vietnam. Some markets have initiated their first-ever investigations into Vietnamese products this year, like South Africa.

Foreign-initiated trade defence cases against Vietnam in 2024 reached 29, doubling the figure from 2023. This marks the second-highest number in history, surpassed only by 2020. This trend indicates that trade defence investigations are likely to intensify in the coming period.

A notable concern lies in the expanding scope of goods subject to trade defence investigations. While it was commonly assumed that only major export products with high competitiveness would engage such scrutiny, 2024 has revealed a different reality.

Even items with modest export turnover, such as paper plates worth merely $9 million, have come under investigation. This development necessitates increased vigilance and proactive efforts from Vietnamese enterprises, especially small- and medium-sized businesses, to gain a comprehensive understanding of trade defence regulations.

The US continues to present growing challenges to our exporting enterprises, as evidenced by the increasing frequency of trade defence investigations. Forecasts suggest that this trend may become even more complex in 2025. The ripple effect from the US has also prompted other nations like Indonesia to tighten their trade protection measures.

Last year, Indonesia’s minister of trade announced plans to enhance the application of trade defence measures, with proposed tariff rates ranging from 100-200 per cent on numerous Vietnamese goods, including electronics, textiles, footwear, and ceramic tiles. This underscores the need for Vietnamese enterprises to adapt to shifting global trade policies while also exploring new potential markets.

To address the risk of trade defence investigations, the Trade Remedies Authority under the MoIT has regularly updated an early warning list of goods at risk of being subject to trade defence and anti-circumvention measures. According to the latest list, products expected to be at high risk of investigation in 2025 and the foreseeable future include wood-related items, steel and aluminium products, copper pipes, refrigerators, washing machines, and tyres, among others.

To assist businesses in overcoming these difficulties, the MoIT has implemented numerous support measures, leveraging experience gained from the 273 prior cases. The ministry consistently ensures strict compliance with current legal regulations while providing effective information and support to enterprises.

Firstly, it has established an early warning system, enabling businesses and industry associations to promptly identify potential risks and prepare accordingly. In cases where investigations arise, the MoIT will provide detailed information on the procedures and requirements of each country.

It also collaborates closely with relevant authorities to devise effective countermeasures. If Vietnamese enterprises become the subject of an investigation, the ministry actively participates by presenting evidence and providing clear explanations to safeguard the interests of domestic enterprises.

Case developments are monitored closely, with the MoIT maintaining strong coordination with businesses. If signs indicate that the accusations by investigating authorities are unfounded or that the investigative process breaches World Trade Organization (WTO) rules, free trade agreements, or international law, timely responses are issued to address these concerns.

Additionally, the MoIT has reported to the prime minister and brought five cases involving Vietnam to the WTO’s dispute settlement mechanism. This approach has been employed in instances where importing nations are perceived to have implemented measures contravening WTO regulations, thereby safeguarding Vietnamese businesses.

These efforts have yielded positive outcomes, with many Vietnamese enterprises having successfully avoided or minimised import tariffs in key markets, notably the US. Investigations into products such as steel wheels, extruded aluminium, and wooden cabinets have concluded favourably, enabling Vietnamese firms to maintain and expand their export markets.

In the case of the subsidy investigation on warm-water shrimp, Vietnam’s seafood industry received encouraging news, with an import tax rate of only 2.84 per cent – significantly lower than competitors such as India and Ecuador. Consequently, shrimp exports in 2024 recorded positive growth compared to previous years.

Products like wooden cabinets achieved favourable outcomes. Domestic enterprises have also secured notable success in international markets. For example, in Turkey, our collaborative businesses were exempted from tariffs in the anti-circumvention investigation on solar panels. Likewise, in India, Vietnamese companies benefited from a zero tariff rate in the investigation on stainless steel pipes.