Export market lawsuits against Vietnamese wood industry a worrying trend: industry insiders

Five lawsuits recently lodged against Vietnamese wood industry firms in crucial export markets are worrying industry insiders about more to come, especially since the U.S. has not recognized Vietnam as a market economy.

They say that this makes it more likely the firms will face anti-dumping and anti-subsidy investigations from the most important export market – the U.S.

Three of five lawsuits lodged in quick succession against Vietnamese wood enterprises are in the U.S. market, which represents over 54% of the industry's total export value.

Trieu Van Luc, deputy director of the Department of Forestry, a body of the Ministry of Agriculture and Rural Development, said at a recent conference that the cumulative value of wood and forest product exports in the first seven months of 2024 exceeded that of the same period in 2023.

Specifically, wood and forest product exports are estimated at $9.36 billion, reaching 61.5% of the annual plan and showing a 20.5% increase over the same period in 2023. This included $5.97 billion from wood products, up 22.2% year-on-year; $2.79 billion from wood, up 20.9% year-on-year; and $609 million from non-timber forest products, up 4.6% year-on-year.

The conference was organized by the agriculture ministry in collaboration with the People's Committee of Binh Duong province and wood industry associations.

It was noted at the conference that there was positive growth in exports to key markets. Exports to the U.S. reached $5.02 billion, up 24% year-on-year; China: $1.22 billion, up 37.92% year-on-year; and the EU: $555 million, up 22.44% year-on-year.

In this industry, foreign-invested enterprises (FIEs) accounted for $3.99 billion, up 22.3% year-on-year, while exports by domestic enterprises reached $5.37 billion, up 19.2% year-on-year.

Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association (VIFOREST), cited data from Vietnam Customs indicating that in the first half of 2024, 3,324 enterprises exported wood and wood products totaling $7.36 billion.

Of these, FIEs accounted for $3.48 billion, or 47.3% of the total export turnover, up 19.5% year-on-year.

Although their export value was significant, the number of FIEs engaged in exports was just 669, or 20.1% of the total, but up 10.5% compared to the previous year.

Lap said that these figures pointed to the need for stronger collaboration between FIEs and domestic enterprises for sustainable development of the wood industry.

The lawsuits

The U.S. market, crucial for Vietnamese wood exports, was also the source of a majority of lawsuits filed against local firms, the conference heard.

According to VIFOREST, the five lawsuits recently filed against Vietnamese firms were from South Korea, Canada, and the U.S. The cases’ outcomes have been finalized, for the most part.

“Case 301 (on illegal logging and trade) requires our wood businesses to adhere to the commitments outlined in the resolution signed with the U.S. Specifically, for wooden cabinets and plywood, businesses are required to complete the self-import declaration form for U.S. contractors,” said Lap.

Lap expressed concern that the U.S. Department of Commerce (DOC) has not recognized Vietnam as a market economy. This means that Vietnamese exporters will continue to face discrimination in anti-dumping and anti-subsidy investigations.

For instance, actual production costs will not be acknowledged and instead, a "replacement value" from a third country will be used calculate the dumping margin.

He also anticipated that the number of lawsuits might increase as the U.S. and global economies face challenges, and as the U.S. government seeks voter support ahead of the upcoming presidential election.

Lap suggested that the agriculture ministry coordinates with relevant ministries to support and guide Vietnamese enterprises in responding to U.S. trade defense investigations. This would include coordinating with the investigating agency to provide information, facilitating inspections and adapting to the expanding authority and evolving regulations of the DOC, particularly those related to anti-dumping and anti-subsidy investigations.

A coordination mechanism is needed to update information on policy changes in key export markets and provide forecasts, warnings and information related to trade defense, he added.