Vietnam cracks down on fraud on US exports, document shows
New stricter procedures are to be implemented to inspect factories and supervise the release of “Made in Vietnam” labels
[HANOI] Vietnam’s trade ministry has issued a directive to crack down on illegal transhipment of goods to the United States and other trading partners as it tries to avoid steep US tariffs, according to a document reviewed by Reuters.
The ministry in the directive, which was dated and effective Apr 15, said trade fraud was likely to increase amid growing tension caused by US tariffs.
That in turn would make it “more complicated to avoid sanctions that countries will apply to imported goods” if fraud is not prevented, it said.
The directive did not specifically name any countries where transhipment fraud might originate. However, Vietnam’s goods imports are nearly 40 per cent from China and Washington has openly accused Beijing of using the South-east Asian nation as a transhipment hub to dodge US duties.
Vietnam has been slapped by the Trump administration with 46 per cent “reciprocal” tariffs, currently paused until July, which if applied could seriously undermine a growth model that relies on exports to the United States, its top market, and large investments in the country by foreign manufacturers.
Under the directive, officials at the trade ministry, customs and other agencies have been told to strengthen supervision and inspection of imported goods to establish their origin, “especially imported raw materials used for production and export”.
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The directive was issued the day China’s President Xi Jinping concluded a trip to Vietnam during which several agreements were signed, including one on strengthening cooperation between agencies in charge of issuing certificates on the origin of goods.
Earlier this week, Beijing warned countries against striking trade deals with the US at its expense.
Under allegations of illegal transhipment, exported goods from China stop in Vietnam to change their certificate of origin despite no or insufficient value being added in the country, before being shipped to the United States where they can enjoy lower tariffs than if they were labelled as Chinese products.
New stricter procedures are to be implemented to inspect factories and supervise the release of “Made in Vietnam” labels, “especially for enterprises with a sudden increase in the number of applications for certificates of origin”, the Vietnamese trade ministry’s document said.
It instructs officials to propose when needed “specific measures to prevent illegal transhipment”. The directive was issued after an emergency meeting held by Vietnam’s government office early in April, hours after US President Donald Trump announced the duties. REUTERS
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