Report on International Voluntary Exporter Registration Schemes: Best Practices, Opportunities and Challenges

The Program works with the General Department of Vietnam Customs (GDVC) to ensure simplification, harmonization, professionalization, adoption, and implementation of risk management approaches at the national and provincial levels to expedite cross-border trade and to enable Vietnam to implement WTO TFA commitments. Vietnam is a high-risk country for illicit and illegal trade, with concerns over transshipment, misdeclarations of origin, smuggling, and commercial commingling of illegal goods placing legitimate Vietnamese traders at risk for international investigative and punitive actions. To address the rise of trade remedies and sanctions on specific high-risk trade sectors, the Ministry of Industry and Trade (MOIT) is exploring whether to introduce a voluntary exporter registration scheme for exporters presenting a high-risk for origin fraud, illegal transshipment, or antidumping/countervailing duty evasion. The purpose of this report is to develop a study into the feasibility of establishing a voluntary exporter registration scheme for exports with high-risk of origin fraud, illegal transshipment, or antidumping/countervailing duty evasion. The report will review various methods of origin certification, including those processes with key multilateral and bilateral trade agreements, to establish a foundation for recommending the best type of exporter-based scheme. Best practices found in select AEO/Trusted Trader programs and private sector approaches to origin verification will help refine a mature approach to origin certification and verification. Through a review of open-source government and academic information, the report addresses the following issues: a review of various trade remedies and enforcement actions on key high-risk sectors of Vietnam international trade, an overview of key CO regimes, AEO Trusted Trader programs, and private sector solutions, with a specific view on the primary export markets for Vietnam traders, and analysis of surveys to Vietnam competent authorities and traders on the efficacy of existing CO programs, including exporter-based programs. Key findings from the report include: Vietnam is feeling the effects of the US-China trade relationship in large part because of the potential for Chinese goods to be shipped through Vietnam illicitly, trade remedies impacting Vietnam exports are varied and predominantly driven by US trade actions, and there are several self-certification exporter registration schemes in operation across the globe, one of the more popular schemes being the voluntary exporter registration scheme employed by the EU Registered Exporter (REX) system. The report also highlights the difference in approach between the Registered Exporter Model (e.g., REX) and the Approved Exporter Model (e.g., AEO), with the REX system providing immediate facilitation benefits and trust to the exporter, and the AEO system providing confidence and trust once the integrity of the exporter's systems has been validated. Instituting a voluntary exporter registration scheme in Vietnam shows great promise when measured by trade facilitation benefits, but there is little evidence to suggest that instituting a voluntary exporter registration model alone would alleviate origin fraud risks. The report recommends that a voluntary exporter registration scheme will be valuable in liberalizing trade programs and opportunities for Vietnam traders and should be modeled on the efforts of the EU REX system. However, it should be noted that moving forward with this scheme will not necessarily have significant impact on reducing the number or impact of trade remedies or sanctions. If the goal of instituting the voluntary exporter registration scheme is to reduce origin fraud risks, the scheme should be supplemented by other initiatives recognized internationally, and particularly by the US, as those that help reduce the risk of non-compliance of Customs and trade laws.