April 12, 2014
The U.S. Department of Commerce’s recent announcement of the preliminary result of the eighth period of review (POR8) on anti-dumping tax rates imposed on warm water frozen shrimp imports from Vietnam from February 1, 2012 to January 31, 2013, leaves local shrimp exporters with more challenges.
With bills worth US$185.4 million in 2013, the U.S. is the biggest market of Minh Phu Seafood Corporation in Vietnam. As U.S. importers accounts for 35% of total export revenue of Minh Phu, the enterprise has been always a mandatory respondent of the review. In 2008, Minh Phu contributed 90% of the stake in establishing Mseafood, a company in the U.S., to solve anti-dumping tax-related issues.
According to U.S. anti-dumping tax law, Mseafood has to pay provisional duty with tariff rates set by the Department of Commerce (DOC). Then, the duty will be reviewed dependent upon DOC’s decisions each year. According to Minh Phu’s 2013 annual report, it paid VND72 billion in provisional anti-dumping tax in the U.S. as of the end of last year versus VND112 billion in 2012. Different tax rates at the reviews were the cause of the falling duties by Minh Phu.
Over the past three years, Minh Phu had enjoyed lower tax rates after each annual review. POR6 regulated a modest tax rate of 0.53% while POR7 even annulled the tax rate. If Minh Phu gets the zero tax rate in the following review, it will be free from the anti-dumping duty noose forever.
However, the preliminary result of POR8 stated that Minh Phu Seafood Corporation and Soc Trang Seafood Joint Stock Company, the two mandatory respondents of the review, are subject to temporary anti-dumping tariffs of 4.98% and 9.75% respectively. Comparing to the export value, Minh Phu will have to set aside a large ratio of its short-term total asset to pay the provisional tax, not to mention expenditures Minh Phu has spent of lawyer service to provide information and debate with DOC during the recent administrative reviews.
While enterprises are still confused at POR8, they have to confront POR9 – administrative review for shrimp exports in 2014.
To prepare for POR9, 30 shrimp exporters under the Vietnam Association of Seafood Exporters and Producers (VASEP) required to provide information for DOC will pool from US$11,000 – 15,000 each for lawyer fees, equivalent to what they spent in 2013, said VASEP general secretary Truong Dinh Hoe.
Strong capability required
At a meeting of shrimp exporters a few days after POR8 result was announced, Ngo Van Ich, chairman of Nha Trang Seafoods Company, which used to be a mandatory respondent of numerous administrative reviews, said there are many things to do aside from fees. “Enterprises who feel that they could not tolerate the game should withdraw,” he said.
Explaining complicated issues enterprises must consider, lawyer Dinh Anh Tuyet from IDVN law firm, who has given consulting to Vietnamese shrimp exporters during many reviews, said that enterprises have to declare a wide range of information. Declarations lasts up to six months until official decision is announced and only experienced experts can engage in the job. In addition, the accounting system of Vietnamese firms, even those with significant export achievements and experiences in anti-dumping tax reviews, may not fit in complicate and specific declaration demands of DOC. The Department requires respondents to list every invoice and shipping bill of each shipment.
Finally, lawyer fee is also a big burden. For a small shrimp exporter with annual revenue of several millions of U.S. dollars, the earnings can only help it afford lawyers fees and human resources for file preparation, Tuyet added.
Therefore, it is necessary to have a clear vision on corporate capability to decide whether an enterprise should take part in the battle.
(By Pham Thai)