The US is the biggest market in the world that attracts most foreign businesses.

After 15 years of normalizing its relations with Vietnam, the US has become Vietnam’s largest export market with high trade surplus on record.

According to the Vietnam Trade Office in the US, Vietnam’s export turnover to the US is likely to reach US$14.2 billion this year.

Over the past seven months, the total export-import turnover of Vietnam and the US hit US$9.9 billion, up 15.1 percent over the same period last year. Vietnam’s exports to the US in the reviewed period reached US$7.9 billion, (up 14 percent), among which garments and textiles topped the list of highly valued export products with US$3.2 billion.

However, US strict supervisory mechanisms for product distribution and quality control have posed a huge challenge to Vietnamese businesses.

Following the violations of product safety by Chinese producers in 2006 and 2007, the US has tightened many regulations on consumer goods safety.

For example, after the substandard Chinese products were revoked in 2008, the US has passed its Consumer Product Safety Improvement Act (CPSIA), causing a wide-range impact on various products such as garments and textiles, toys and electronics.

The application of new requirements in the act will come into force as of mid February next year.

Nancy Nord, a commissioner of the US Consumer Product Safety Commission (CPSC) says under the CPSIA, all substandard goods will be destroyed instead of sending them back to exporting countries as before. If such a measure is not strong enough, the authorized agencies are entitled to raise the level of fines to US$15 million for a violation.

As US consumers appreciate high-quality and environmentally-friendly products, all products exported to the US must be certified by a third party to ensure that they meet requirements for product safety.

To avoid violating CPSIA regulations, products made in or imported into the US must be double-checked by an independent test section in order to get an international certification from the CPSC. Vietnam has also applied for CPSC certificates.

Vietnam’s garment and textile exports to the US is picking up but how to ensure product safety is another matter. Vietnam imports materials from different countries around the world so its garment and textile businesses need to share information with their material suppliers so that they can meet US requirements for product safety.

The Executive Vice President of the American Apparel and Footwear Association, Stephen Lamar, says Vietnamese businesses need to abide by product safety regulations. Tracing the product origin is necessary and unavoidable. If not, they will be banned from exporting directly to the US market.

According to experts from the US Department of Commerce (DOC), a product exported to the US will have to pay anti-subsidy tax if DOC proves that it violates three basic factors.

Firstly, it gets financial support from the Government, secondly, it brings benefit to people who enjoy subsidies and finally, the subsidy is for a specific business, or a group of businesses, for a production line or specific products.

Therefore, any preferential programme of the government aimed at attracting investment is considered a violation if it gives incentives for a specific business or production line.

Recently, DOC put forward 14 proposals to enhance the enforcement of anti-dumping and anti-subsidy laws. These proposals are related to the process and method of investigation into market-economic countries, like Vietnam, which would causes difficulties for foreign export businesses in order to sharpen US businesses’ competitiveness.

Dinh Thi My Loan, President of the Trade Remedies Council (TRC) under the Vietnam Chamber of Commerce and Industry, says that these proposals would put Vietnamese export activities to the US in a fix. Domestic businesses need to have a basic knowledge of how to cope with the situation and to be more careful to export goods to the US market.

Ms. Loan adds that the direct impact of these proposals is not clear, but as US lawyer William H. Barringer from the Winston & Strawn LLP law firm says these proposals aim to make lawsuits and legal proceedings more attractive to US plaintiff and Vietnamese businesses are at high risk of being charged with dumping goods on the US market.

Those industries with high export value and growth, which focus on the US market would also be seriously affected. However, there is no exception for those products which have just penetrated the US market.

Be active and co-operative when facing lawsuits
Both Vietnamese and US experts advise that businesses should be active and co-operative to provide all documents that DOC needs to carry out anti-dumping and anti-subsidy investigations. Because if they fail to provide adequate information as requested, DOC will use available information to place them at a disadvantage.

The previous lawsuits show that many businesses were not active to get involved in the legal proceedings had to pay high taxes.

Ms Loan says that the US imposition of  high taxes badly affect both Vietnamese export businesses and US partners and consumers, for instance, importers and distributors will  have to buy goods at higher prices and consumers will have no chance to use high-quality products at reasonable prices.

To avoid such lawsuits Vietnam must work closely with other countries to work out a tax-base to force the US to make a suitable change.