Forest trends (an American forestry research organization) in collaboration with the Vietnam Timber and Forest Products Association (Vifores) researched and published the report "Risks in trade fraud in furniture products: school kitchen cabinets and sofa ".
According to US data, only the code of wooden furniture has the code 41000, each year the US imports from other countries to 36-39 billion USD. According to the statistics from UNCOMTRADE, in 2018, the export turnover of these 228 Chinese wood products to the US was 20.7 billion USD; from Vietnam to the US is nearly 5 billion USD.
According to Forest trends, up to now, a total of 228 Chinese wood and wood products exported to the US are subject to a new tax rate of 28%. In addition to the new tariffs imposed by the trade war, many Chinese furniture products are also subject to very high anti-dumping (AD) and anti-subsidy (CVD) tariffs due to US government regulations.
Specifically, Chinese kitchen cabinets exported to the US are subject to 4 levels from anti-dumping tax from 4.37% to 262.18% from February 28, 2020. Chinese sofa products exported to the US are subject to anti-dumping tax with 2 levels from 4.27% to 70.71% since December 20, 2004. Chinese hardwood plywood, which is currently subject to AD / CVD by the US since January 4, 2018, has an anti-dumping tax (AD) of 183.36% and an anti-subsidy tax (CVD) of 194 , 9%.
On April 13, 2020, the US side officially decided to apply anti-dumping tax on Chinese kitchen cabinets exported to this country with tax rates up to 48.5%, even Some items of the same materials are subject to tax up to 293.45%.
Due to the new tariffs, exports in 2019 decreased by 23% compared to exports in 2018. According to calculations by Forest Trends based on data from China Customs, sofa exports (HS 940171 ) from China to the US decreased sharply, from nearly 1.9 billion USD in 2018 to nearly 1.36 billion USD in 2019, equivalent to a decrease of 28%. Kitchen cabinets (HS 940340) is an important commodity group exported to the US by China. The value of imports of these goods into the US decreased sharply, from 13.7 billion USD in 2018 to less than 9.7 billion USD in 2019.
In 2019, the export turnover of wood products from Vietnam to the US reached nearly 5.13 billion USD. Turnover from this market accounts for about 54% of the total export turnover of wood products of Vietnam to all markets.
In the first 7 months of 2020, Vietnam's wood products exported to the US reached 3.23 billion USD, up 25% over the same period in 2019. Growth drivers of wood and wood products exports to the market The US is mainly from the group of interior and exterior wooden products. In which, the items with very high growth were: kitchen furniture (code 940340) increased 156%, other wooden furniture (code 9403.60) increased by 25% and furniture parts (code 9403.90) increased. 34%.
Seating is the group with the highest export value to the US market. Each year, there are about 380 enterprises directly involved in the export of sofas to the US, including finished sofa products (code 940161) and sofa parts (code 940190). The number of sofa exporters to the US continues to increase: in 2019, it is 378, according to the statistics in the first 7 months of 2020, 388 enterprises.
Kitchen cabinets (code 94034000) is one of the important commodity groups exported to the US from Vietnam. Kitchen cabinets made from Vietnam are still in the form of detailed parts, which are declared in the group of other product codes such as construction furniture (code 4418), other wooden furniture (code 940360) or furniture parts (code 940360). ).
In the first 7 months of 2020, the export turnover of kitchen cabinets from Vietnam to the US reached 235.9 million USD, up 156% over the same period in 2019, accounting for 74% of the total export turnover of this item in the same period for all. markets. On average, each year there are over 200 enterprises exporting kitchen cabinets to the US. The number of enterprises directly participating in the export of kitchen cabinets continues to increase: in 2019, it is 201 enterprises, in the first seven months of 2020, it is 207 enterprises.
However, the risk for furniture, especially plywood products exported from Vietnam to the US market has become reality, it is a trade fraud lawsuit. On June 9, 2020, the US side announced an official investigation into the Vietnamese plywood industry.
According to the allegations of the US Hardwood Plywood Fair Trade Alliance, a number of companies exporting plywood from Vietnam to the US market, mainly companies with Chinese ownership, have violated tax evasion legislation within the framework of the US Tax Act of 1930.
According to Forest trends, not any Chinese enterprises doing business in Vietnam engaged in the export of kitchen cabinets and sofas to the United States have engaged in commercial fraud. However, kitchen cabinets, sofas and parts of these items are hidden signals of commercial risk, especially in the stage of origin. The export value of these items from China to the US has fallen sharply since the beginning of the US-China trade war, mainly because of the new tariffs imposed by the US Government on these items since China.
The case study of Chinese companies engaged in the manufacture of kitchen cabinets and sofas shows that most domestic (Vietnamese) production is very limited. Companies engaged in the production and import-export activities of this commodity focus on only one product or its parts without diversifying the output of the product.
If coming here, the conclusion of the US investigation is similar to the original allegation, the enterprises exporting Vietnamese plywood products to the United States will suffer huge consequences for the tax rate. The lessons from the US lawsuits against Chinese wood products are the best evidence.
Facing the commercial risks of the plywood industry, the Government has recently introduced a number of important mechanisms and policies. Specifically, the Prime Minister's Decision 824 in 2019 approving the project "Strengthening the state management on anti-evasion measures against trade remedies and origin fraud" requires authorities to strengthen inspecting and managing potentially risky items, including plywood imported from China into Vietnam.
The important issue is how to control these risks? The report by Forest trends and Vifores recommended to Vietnamese authorities a number of mechanisms, policies and measures. First of all, from the import and export statistical data source, the Customs authority will coordinate with information from enterprises and associations to identify products showing signs of risk. Import and export statistics from the customs office allow an unusual increase in the export of these items from Vietnam to the US, and in the importation of this item, or part of the country. This item is from China to Vietnam.
It is recommended that the Timber and Forest Product Association establish a network to collect information through local enterprises and associations. Enterprises in the industry directly engaged in the production and trading of products with signs of fraud by Chinese companies (or Vietnamese companies working for Chinese companies) are sources of information. Most importantly, it helps to keep regulators at bay for companies committed to fraud.
Vifores and local wood processing associations need to build links with Chinese companies doing business in Vietnam, exploit and receive information from this network to locate companies with frauds. Trade fraud not only affects Vietnamese businesses but also directly affects Chinese companies doing serious business in Vietnam. Propose the regulator to set up an action group, with the participation of all stakeholders, to detect and handle the problem quickly and effectively.
The complexity of commercial fraud requires prompt and effective resolution beyond the scope of customs authorities. This requires the participation of other stakeholders, including industry, commerce, taxation, and finance. In addition, the management agencies need to strengthen resources, closely inspect and supervise the certification of origin of exported products.
