HANOI, Vietnam — The Ministry of Industry and Trade (MoIT) announced the US is initiating an investigation against defensive tax evasion on wooden cabinets imported from Vietnam, according to posted reports.

The Vietnam Timber and Forest Products Association said the US Department of Commerce (DoC) had notified Vietnamese authorities that it filed an application to begin investigating “suspicions of trade remedy tax evasion on wooden cabinets imported from Việtnam and Malaysia, according to the report by EIN NewsDesk.

The DOC’s website does not clearly indicate if an application has been made. In 2020, the agency did initiate an investigation into Vietnamese imports. 

The product proposed for investigation against trade remedy tax evasion is wooden cabinets with HS codes 9403.40.9060, 9403.60.8081 and 8403.90.7080. The plaintiff was the American Kitchen Cabinet Alliance, representing a number of US wood cabinet manufacturers.

According to the association, the US issued an order to impose anti-dumping and anti-subsidy taxes on the same products originating from China in February 2020. Since then, exports of these products from China to the US have dropped by 54 percent from $2.5 billion to $1.6 billion.

Meanwhile, the Viatnamese exports of wood products to the US increased by more than 130 percent from $1.37 to $2.7 billion. At the same time, imports of these products from China to Vietnam increased from $232 million to $810 million.

According to the EIN NewsDesk, a representative of the Vietnam Timber and Forest Products Association said: "The US business side alleges that Vietnamese enterprises have imported cabinet parts from China that are subject to trade remedy tax, then fully assembled in Việt Nam and exported to the US." 

He said the US business side proposed its Ministry of Commerce extend the current tax order on wooden cabinets originating from China assembled in Vietnam and exported to the US. 

The report said that the DoC found that if the product range is not extended, the plaintiff proposes an investigation against trade remedy tax evasion with wooden cabinets imported from Vietnam.

It is expected that the US Department of Commerce will decide to initiate an investigation by the end of May, so the association recommended that timber exporters should keep updated on proceedings.

Currently, the US is the largest import market for Vietnam agricultural, forestry and fishery products. In the first four months of the year, the export of wood and wood products to the US market was estimated at $3.3 billion, accounting for 68.2 per cent of the turnover of Việt Nam's agricultural, forestry and fishery products exported to this market.

According to the MoIT’s Trade Remedies Administration, in the period of 2019-2021, after the US imposed tariffs on China, imports of products subject to investigation from China into the United States decreased, exports from Vietnam to the US increased, and the volume of imports from China into Vietnam rose sharply.

Regarding other imported timber products from Vietnam, DoC announced an extension of the time to issue the final conclusion on the anti-dumping and anti-subsidy tax evasion investigation case with hardwood plywood from Vietnam. Accordingly, the DOC is expected to issue its final conclusion on October 17, 2022, instead of April 20, 2022, as previously announced. This is the DOC's third renewal of this content.

The case was initiated by the DOC to investigate on June 17, 2020, at the request of the US Customs Service (CBP) with two contents on the scope inquiry and the anticircumvention.

In the scope inquiry, DoC will keep the investigation to determine if hardwood plywood imported from Vietnam into the US was within the scope of products subject to tariffs, considering five factors including investment level of manufacturing and exporting enterprises, level of investment in research and product development, manufacturing process in Việt Nam, size of production facilities in Việt Nam and the value-added portion of the product made in Việt Nam.

The objective of an anti-circumvention investigation by the US was to ensure the effectiveness of the enforcement of trade remedies that are being applied to Chinese products.