U. S. sanctions against China worry Vietnamese exporters
2023.02.14 02:21
U. S. sanctions against China worry Vietnamese exporters
By Tiffany Smith
Budrigannews.com – As lucrative trade in goods like solar panels and clothing comes under closer scrutiny in Washington, concerned exporters based in Vietnam are attempting to comply with a U.S. ban on imported products that use raw materials from China’s Xinjiang.
Executives and others with knowledge of the situation said that during U.S. Trade Representative Katherine Tai’s visit to Vietnam this week, some industries may be importing raw materials from Xinjiang, sometimes unknowingly, or may find it difficult to prove otherwise.
According to a statement made by the media, Tai had no intention of discussing the matter with the Vietnamese government, and the U.S. embassy in Hanoi had no comment on the matter.
According to data from the United States customs agency, the U.S. Uyghur Forced Labor Prevention Act, which went into effect in June, has already halted over 1,500 shipments to the United States from all over the world worth approximately $500 million.
China is accused by Washington of herding ethnic Uyghurs and other Muslims into camps and committing genocide in Xinjiang. Beijing claims it has established “vocational training centers” to combat terrorism, separatism, and religious radicalism, despite its denial of abuses in Xinjiang.
The shipments of goods like electronics, clothing, and footwear accounted for the majority of Vietnam’s $116 billion trade surplus with the United States in the previous year.
Due to the fact that solar cells rely heavily on polysilicon, whose global production is concentrated in Xinjiang, the solar panel industry may be particularly vulnerable. Vietnam’s panel exports to the United States were worth $3.4 billion in 2020, and it accounts for approximately 80% of U.S. panel supplies, along with other Southeast Asian nations.
According to Kheng Joo Ung, Managing Director of the Vietnam unit of First Solar Inc. (NASDAQ:), “This is a major concern if the silicon is sourced from the concerned region.” a major provider of panels for export to the United States.
He claimed, without naming any companies, that competitors in Vietnam used polysilicon in their panels, but First Solar did not. Ung stated that Vietnam produces a portion of polysilicon.
According to investment advisor Dezan Shira, the majority of the leading manufacturers of solar panels in Vietnam are Chinese businesses, in addition to First Solar.
Two industry professionals, who requested anonymity due to the confidential nature of the information, stated that additional Chinese suppliers of components and supporting services, such as plastic molding and die casting, planned to invest in Vietnam to supply solar panel manufacturers there.
At this time, there is no evidence that polysilicon from Xinjiang is being used in Vietnam.
When asked for a comment, the Vietnamese government did not immediately respond.
Reuters was informed by a third trade expert who had been to internal meetings with U.S. customs officials in recent weeks that Vietnam had been repeatedly mentioned as one of the nations most likely to violate U.S. trade restrictions. Due to the sensitive nature of the situation, the expert declined to be identified.
Vietnam’s efforts to comply with the new rules have been praised by U.S. officials, and some have suggested that compliance may only be temporary.
Risks associated with compliance exist for companies that are determined to follow the rules.
According to a Vietnam-based executive, it may be challenging for smaller actors to produce the required documentation due to the extensive supply chains and higher costs of due diligence. The textile industry is also concerned due to Xinjiang’s significant cotton yarn production. Because he was not permitted to speak to the media, the executive declined to provide his name.
