Vietnam to introduce new penalties for illegal transshipment following US trade pact

According to papers obtained by Reuters, Vietnam has concentrated its inspections on Chinese commodities in an effort to meet its promises to Washington and is considering harsher sanctions to combat trade fraud and the illicit transshipment of goods. The Communist-run nation and the administration of US President Donald Trump reached an initial agreement last week that lowers the proposed US tariffs on Vietnamese goods from 46% to 20%.

However, Washington would impose a 40% penalty on items it considers to be unlawfully transshipped through Vietnam. Maintaining Trump’s favor will depend on the new policies, which build on a recent crackdown on import counterfeits and trade fraud. Vietnam has been accused by US officials on numerous occasions of serving as a transit country for Chinese commodities headed for the US. They claim that some products bear “Made in Vietnam” labels even if they haven’t been given much or any added value in Vietnam, enabling Chinese exporters to benefit from Vietnam’s reduced taxes and steer clear of the high US duties on Chinese goods.

The Vietnamese government will issue a new decree that will “prescribe additional levels of sanctions for fraud of origin,” and introduce stricter measures and checks to prevent fraud, according to a July 3 trade ministry document. July 3 was the same day that Trump and Vietnam’s top leader To Lam reached their agreement, making the Southeast Asian nation the only other country after Britain so far to reach a preliminary deal on tariffs.

Vietnamese authorities have been told to intensify inspections on exports to the United States, according to the document which said inspections have focused recently on products “at risk of trade fraud… or Chinese items that are subject to trade defence measures by the European Union and the United States”.

The document cited wooden furniture, plywood, steel machine parts, bicycles, batteries, wireless headphones and other electronic products as examples. It listed examples of fraud such as the use of fake papers to obtain certification of origin documents, forged certificates of origin of goods and the import of counterfeit products into Vietnam.