Industry expert: Export lawsuits against Vietnamese timber industry a worrying trend

Five lawsuits recently filed against Vietnamese timber companies in key export markets have industry insiders concerned that more will follow, especially since the United States does not recognize Vietnam as a market economy.

They say this increases the likelihood that the companies will face anti-dumping and anti-subsidy investigations from their main export market – the United States.

Three of the five lawsuits filed in quick succession against Vietnamese timber companies concern the US market, which accounts for over 54 percent of the industry's total export value.

Trieu Van Luc, deputy director of the Forestry Department, an institution 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.

In particular, exports of wood and forest products are estimated at US$9.361 billion, accounting for 61.5% of the annual plan and representing an increase of 20.5% over the same period in 2023. Of these, wood products account for US$5.97 billion, an increase of 22.2% year-on-year; wood, US$2.79 billion, an increase of 20.9% year-on-year; and non-wood forest products, US$609 million, an increase of 4.6% year-on-year.

The conference was organized by the Ministry of Agriculture and Rural Development in cooperation with the People's Committee of Binh Duong Province and associations of the timber industry.

The conference noted that exports to major markets recorded positive growth. Exports to the US reached $5.02 billion, up 24 percent year-on-year; to China: $1.22 billion, up 37.92 percent year-on-year; and to the EU: $555 million, up 22.44 percent year-on-year.

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

Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association (VIFOREST), cited data from the Directorate General of Vietnam Customs showing that 3,324 companies exported timber and wood products with a total value of US$7.36 billion in the first half of 2024.

Of this, foreign companies accounted for 3.48 billion US dollars or 47.3 percent of total export sales, an increase of 19.5 percent over the previous year.

Although their export value was significant, the number of exporting FIEs was only 669, or 20.1% of the total, but this represents an increase of 10.5% over the previous year.

Lap said these figures show that greater cooperation between foreign companies and domestic companies is needed for the sustainable development of the timber industry.

The complaints

The US market, which is crucial for Vietnamese timber exports, was also the subject of most of the lawsuits filed against domestic companies, according to the conference.

According to VIFOREST, the five lawsuits recently filed against Vietnamese companies came from South Korea, Canada and the USA. The outcomes of the cases have largely already been finalized.

“Case 301 (on illegal logging and trafficking) requires our logging companies to comply with the obligations set out in the resolution signed with the United States. Specifically, for wooden cabinets and plywood, companies must complete the Self-Import Declaration Form for U.S. Contractors,” Lap said.

Lap expressed concern that the U.S. Department of Commerce does not recognize Vietnam as a market economy, meaning Vietnamese exporters will continue to face discrimination in anti-dumping and anti-subsidy investigations.

For example, the actual production costs are not recognised and instead a “replacement value” from a third country is used to calculate the dumping margin.

He also expects the number of lawsuits could rise as the U.S. and global economies face major challenges and the U.S. government vie for voter support ahead of the upcoming presidential election.

Lap suggested that the Ministry of Agriculture and Rural Development coordinate with relevant ministries to support and guide Vietnamese companies in responding to U.S. trade defense investigations. This includes coordinating with the investigative agency to provide information, facilitate inspections, and adapt to the DOC's expanding powers and evolving regulations, particularly related to anti-dumping and anti-subsidy investigations.

A coordination mechanism is needed to keep up to date with information on policy changes in key export markets and to provide forecasts, warnings and trade defence information, he added.