Import, export, trade, customs: Thailand’s anti-dumping framework
Thailand’s anti-dumping legislation
Thailand enacted in 1999 the Anti-Dumping and Countervailing Act, based mainly on the WTO Antidumping Agreement and replaced the outdated Anti-Dumping and Countervailing Act as of 1964. Thailand is a member of the World Trade Organization, and widely adopted international free trade regulations including an anti-dumping mechanism.
Dumping is defined as the introduction of merchandise into the commerce of Thailand at an export price below its normal value. The normal value is based on the prices paid by independent customers in the exporting country. The fair comparison between export price and normal value is made at the same level of trade and at the same time.
Anti-dumping rules are overseen by Thailand’s Ministry of Commerce. When its Committee on Dumping and Subsidy determines dumping, an anti-dumping duty (anti-dumping tariff) is imposed to adequately remove any injury on the Thai markets. However, these and other anti-dumping measures have been ineffective in the past, because
- Tariffs can be avoided by importing similar products from countries that are not on the anti-dumping list.
- Other tools and modules to importing products under a different custom code or by changing product composition slightly to be classified under a combined nomenclature (CN) code that is not subject to duties,
- Products can be imported in parts and assembled in Thailand (within or without free zones), where the parts are not subject to duties.
As a result, anti-dumping needs anti-circumvention rules to fight cheap imported products that dodge anti-dumping duties. In a pending draft amendment of the ADC Act, a new chapter regarding anti-circumvention penalties shall be added. Under the draft, circumvention is any activity designed to avoid the payment of anti-dumping or countervailing duties imposed on a particular product manufactured in and/or exported from other countries.
The amendment will empower the Anti-Dumping and Countervailing Board to carry out an investigation on suspected circumvention and implement anti-circumvention duties in response. However, such avoidance schemes have to be distinguished from
- deliveries of goods from the anti-dumping list through a third country by new ships, new containers, and new documents, and
- circumventing the minimum import price by hidden kickback payments.
Legitimately shifting the production to a third country and illegally issuing the wrong rules of origin (ROO) certificates are separated by a grey area where the red lines might be doubtful. Measures such as anti-dumping (AD), countervailing duty (CVD) and safeguards (SG) can be part of a trade war.
Professional services from Bangkok
PUGNATORIUS Ltd. is the Bangkok-based specialist provider of transactional legal and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property developments and acquisitions. The law firm advises on import to Thailand, export from Thailand, trade laws and industry practice as well as duties, tariffs and customs under Thai and international laws.
Building a factory abroad allows indirect growth, by evading international trade barriers. Legal and tax advice includes the adjustment of cross-border supply chains to better evade the risks of anti-dumping cases and tariff hikes.