European Commission Ends its Anti-Subsidy Probe into Vietnam Polyester Staple Fibre

January 21, 2015 Posted by Vietnam Briefing Reading Time: 4 minutes

HANOI – The European Commission (EC) anti-subsidy probe into polyester staple fibre (PSF) imported from Vietnam, India, and China has been ended in favor of Vietnam. Vietnam will thus not be subject to any legal action from the EC. The news is expected to result in increased fibre exports from these countries to Europe.

As reported by the Vietnam Competition Authority, the anti-subsidy case had to be dropped by the EC since the organization had discovered that the effective subsidy rate for Vietnam was only 1.25 percent. EC and World Trade Organisation regulations stipulate that anti-subsidy investigations should be terminated when it is discovered that the subsidy rate is under two percent. In order to carry out its investigation, the EC collected data from defendants and conducted on-site investigations.

The EC’s investigation began on December 19, 2013, in what was the first European Union anti-subsidy case brought against Vietnam. It examined exports and production of PSF from October 1, 2012 to September 30, 2013. Since 2009, seven anti-subsidy cases have been brought against Vietnam, including one in Canada and five in the USA.

The anti-subsidy case was brought against Vietnam by the European Man-made Fibres Association (CIRFS) on behalf of producers representing over a quarter of EU production of PSF. CIRFS had previously presented evidence of such subsidies violations in Vietnam, these included the provision of inputs by the government for under-cost price, financial incentives provided in the Dinh Vu Industrial Zone, preferential lending to the PSF industry by state-owned banks and direction of private banks to grant preferential loans, the provision of land for under-adequate remuneration, rent and tax reductions or exemptions, interest rate subsidies, and other related matters. The initial case cited 16 relevant Vietnamese Decrees.

The EU and Vietnam completed their ninth round of FTA talks in Danang last September 2014. The talks aimed to reduce tariff and non-tariff barriers, tackle public procurement, regulatory issues, competition, trade, sustainable development and geographical indicators intended to display a product’s point of geographical origin. Negotiations were announced in Brussels in June 2012. In 2013, two-way trade amounted to approximately US$37 billion. Vietnam was the third ASEAN country to hold FTA talks with the EU, after Singapore and Malaysia, and has been followed by Thailand.

For more information on how your company can benefit from Vietnam’s export incentives, please contact Dezan Shira Vietnam for specialist advisory. For a tailored report on Vietnam’s free trade agreements, please contact Asia Briefing at: editor@asiabriefing.com

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