Advance origin ruling urged to minimise risks of trade war

HCM City (VNA) – Vietnamese businesses have been advised to apply the advance origin ruling mechanism to reduce risks amidst significant changes in global trade, such as the US-China trade war.

At a conference in Ho Chi Minh City on December 12, Director of the municipal Customs Department Dinh Ngoc Thang said this mechanism will help companies specify the codes, origin, and customs value of their products in advance.

The advance ruling on goods classification will help minimise disagreements between persons filling customs declaration forms and customs officers over the function of goods. Meanwhile, the advance ruling on value will assist firms in estimating the taxes they have to pay in advance when handling customs clearance procedures.

Notably, the advance ruling on origin will help eliminate the risks of product origin frauds, which is especially helpful in the context of the US-China trade war likely to be prolonged, he said.

Thang elaborated that the trade tension could generate more opportunities for Vietnamese firms to access the US market in the short term. However, Vietnam is also facing the risk of becoming a destination for Chinese goods to falsify their origin to avoid high US tariffs, which would be damaging to Vietnam in the long run.

He added that most Vietnamese businesses have yet to capitalise on the advance rulings to reduce risks and boost import-export activities. Since this mechanism was applied four years ago, the HCM City Customs Department has only recorded just over 170 cases using this mechanism.

Tran Ngoc Liem, Deputy Director of the HCM City branch of the Vietnam Chamber of Commerce and Industry (VCCI), said that the trade war has a considerable influence on Vietnam’s economy.

According to Liem, the US is a leading importer of Vietnamese goods. The structures of Vietnamese and Chinese products shipped to the US are also relatively similar. This means that there is an opening for Vietnam to replace China’s supply sources in the US, but Chinese companies may also take advantage of the goods structure similarity to falsify their origin of goods, he noted.

Liem urged domestic enterprises to actively apply the advance origin ruling to protect themselves, along with the Vietnamese economy.

Echoing the view, Robert Thommen, a representative of the US Customs and Border Protection, said that the application of anti-trade fraud measures, like anti-subsidy and anti-dumping, are becoming more and more popular in the US. In the context of the trade tension with China, the US has tightened control over the risks of Chinese goods being transferred to a third country.

Therefore, Vietnamese firms should be proactive in preventing risks through advance rulings. Notably, they needs to thoroughly understand and adhere to rules of origin to maintain good trade ties with the US in the long term, he added. –VNA