Introduction
\nVietnam has repeatedly demonstrated that it is prepared to look beyond minimum international standards when modernising its legal system.
\nFrom Doi Moi to accession to the World Trade Organization, from the implementation of the EU-Vietnam Free Trade Agreement (EVFTA) to the country\u2019s anticipated FTSE Russell Emerging Market upgrade, Vietnam has consistently adopted reforms that improve transparency, strengthen investor confidence and enhance international competitiveness.
\nToday, another opportunity presents itself.
\nVietnam has fully implemented the WTO Trade Facilitation Agreement (\u201cTFA\u201d) by establishing a legal framework for advance customs rulings. This represents an important achievement.
\nHowever, Vietnam now has the opportunity to move beyond WTO compliance and establish itself as one of the world\u2019s leading jurisdictions for predictable and investor-friendly customs administration.<\/p>\n
What is an Advance Customs Ruling?
\nAn advance customs ruling is one of the most important trade facilitation instruments available to international traders.
\nBefore goods are imported, an importer may submit an application to Customs describing the planned transaction in detail.
\nFor example:
\nA German steel manufacturer intends to export 1,000 tonnes of specialised steel products to Vietnam.
\nBefore shipment, the importer submits all relevant information to Vietnam Customs, including:
\n\u2022\tdetailed product specifications;
\n\u2022\ttariff classification proposal;
\n\u2022\tcertificates of origin;
\n\u2022\tcustoms valuation methodology;
\n\u2022\ttechnical documentation;
\n\u2022\tcommercial contracts;
\n\u2022\tintended customs procedures.
\nVietnam Customs then examines the application and issues an official advance ruling.
\nOnce issued, both Customs and the importer know in advance how the shipment will be treated.
\nThis creates legal certainty before the goods even leave Germany.
\nWhy Advance Rulings Matter
\nInternational supply chains depend upon predictability.
\nLarge investments often require decisions months before production begins.
\nImporters need certainty regarding:
\n\u2022\tcustoms classification;
\n\u2022\tapplicable duty rates;
\n\u2022\tpreferential tariff treatment;
\n\u2022\trules of origin;
\n\u2022\tcustoms valuation;
\n\u2022\timport compliance.
\nWithout legal certainty, investors face unnecessary commercial risks.<\/p>\n
Vietnam\u2019s Current Legal Framework
\nVietnam deserves considerable recognition for implementing the WTO Trade Facilitation Agreement.
\nThe Law on Customs and its implementing regulations establish an advance ruling system covering matters such as:
\n\u2022\ttariff classification;
\n\u2022\torigin of goods; and
\n\u2022\tcustoms valuation.
\nThis framework significantly improves transparency.
\nHowever, under current Vietnamese law, Customs must issue a written decision before the advance ruling becomes effective.
\nIf Customs remains silent, no legal consequence follows.
\nThe importer must simply continue waiting.
\nThe WTO Does Not Require More \u2014 But It Allows More
\nArticle 3 of the WTO Trade Facilitation Agreement requires Members to establish advance ruling systems.
\nIt requires rulings to be issued within a reasonable published period.
\nImportantly, however, the WTO does not require Members to introduce a deemed approval mechanism.
\nThe WTO establishes minimum obligations.
\nNothing prevents Members from adopting more business-friendly procedures.
\nLearning from German Administrative Law
\nGerman administrative law contains an interesting concept known as the Genehmigungsfiktion, or \u201cdeemed approval.\u201d
\nUnder this principle, where legislation specifically provides for it, an administrative application is automatically deemed approved if the competent authority fails to decide within a prescribed statutory period.
\nThe legal effect arises by operation of law.
\nThe applicant does not receive a discretionary favour.
\nInstead, legal certainty is created because the administration failed to act within the legally prescribed timeframe.
\nAlthough this concept does not generally apply to customs procedures in Germany, it demonstrates an important legislative principle:
\nAdministrative efficiency can be encouraged by attaching legal consequences to administrative silence.
\nSeveral jurisdictions around the world have adopted comparable mechanisms in selected regulatory areas.
\nVietnam could develop its own model based upon this internationally recognised legislative technique.
\nA New Reform Opportunity for Vietnam
\nVietnam could introduce a carefully balanced provision stating:
\nWhere an applicant has submitted a complete, accurate and truthful application for an advance customs ruling, and Vietnam Customs fails to issue a decision within the prescribed statutory period, the requested advance ruling shall be deemed approved, unless the matter concerns fraud, prohibited goods, national security, trade remedies or other specifically excluded circumstances.
\nThis proposal would not weaken Customs.
\nInstead, it would encourage administrative discipline while rewarding transparent and compliant businesses.
\nBenefits for Vietnam
\n1. Greater Legal Certainty
\nInvestors can make commercial decisions with confidence.
\n2. Faster Investment Decisions
\nProjects proceed without unnecessary administrative delay.
\n3. Stronger International Competitiveness
\nVietnam would distinguish itself as one of Asia\u2019s most predictable customs jurisdictions.
\n4. Increased Foreign Direct Investment
\nInternational investors consistently rank legal certainty among the most important investment factors.
\n5. Better Administrative Performance
\nStatutory deadlines improve efficiency, accountability and internal management.
\nSuggested Legislative Safeguards
\nA deemed approval mechanism should include appropriate safeguards.
\nFor example:
\n\u2022\tcomplete disclosure by the applicant;
\n\u2022\tsuspension of the statutory period where additional information is requested;
\n\u2022\texclusion for fraud, intentional misrepresentation and false declarations;
\n\u2022\texclusion for prohibited goods and national security matters;
\n\u2022\tpreservation of Customs\u2019 post-clearance audit powers;
\n\u2022\tjudicial review where appropriate.
\nSuch safeguards protect both legitimate trade and the public interest.
\nProposed Action Plan
\nStep 1 \u2013 Establish an Inter-Ministerial Working Group
\nIncluding:
\n\u2022\tMinistry of Finance;
\n\u2022\tVietnam Customs;
\n\u2022\tMinistry of Industry and Trade;
\n\u2022\tMinistry of Justice;
\n\u2022\tVietnam Chamber of Commerce and Industry.
\nStep 2 \u2013 Conduct an International Comparative Study
\nReview legislative models from:
\n\u2022\tGermany;
\n\u2022\tSingapore;
\n\u2022\tAustralia;
\n\u2022\tNew Zealand;
\n\u2022\tCanada;
\n\u2022\tSouth Korea;
\n\u2022\tthe European Union.
\nThe objective should not be to copy foreign law but to identify best practices suitable for Vietnam.
\nStep 3 \u2013 Amend the Customs Law
\nIntroduce:
\n\u2022\tstatutory decision deadlines;
\n\u2022\tdeemed approval provisions;
\n\u2022\tprocedural safeguards;
\n\u2022\telectronic notification systems.
\nStep 4 \u2013 Digitalisation
\nIntegrate advance rulings into Vietnam\u2019s National Single Window and digital customs platform.
\nApplications, tracking, deadline monitoring and rulings should be fully electronic.
\nStep 5 \u2013 Pilot Programme
\nImplement the new mechanism initially for low-risk categories such as tariff classification and origin determinations before extending it to additional customs matters.
\nConclusion
\nVietnam has never become one of Asia\u2019s most successful economies by merely complying with international minimum standards.
\nIts greatest achievements have resulted from adopting reforms that anticipate future economic needs.
\nIntroducing a carefully designed deemed approval mechanism for advance customs rulings would represent another such reform.
\nIt would not only strengthen legal certainty.
\nIt would enhance Vietnam\u2019s reputation as a transparent, efficient and investment-friendly economy.
\nThe WTO Trade Facilitation Agreement provides the foundation.
\nVietnam now has the opportunity to build the next level.
\nRather than asking what the WTO requires, Vietnam can once again ask a more ambitious question:
\nWhat reform will make Vietnam the preferred destination for global investment over the next twenty years?
\nA modern, predictable and efficient advance customs ruling system\u2014supported by a carefully designed deemed approval mechanism\u2014could be one of the answers
\n***
\nFor more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.<\/p>\n","protected":false},"excerpt":{"rendered":"
Introduction Vietnam has repeatedly demonstrated that it is prepared to look beyond minimum international standards when modernising its legal system. From Doi Moi to accession to the World Trade Organization, from the implementation of the EU-Vietnam Free Trade Agreement (EVFTA) to the country\u2019s anticipated FTSE Russell Emerging Market upgrade, Vietnam has consistently adopted reforms that … <\/p>\n
Continue reading “Beyond WTO Compliance: Why Vietnam Should Introduce a Deemed Approval Mechanism for Advance Customs Rulings Learning from International Best Practices to Build the Next Generation of Trade Facilitation”<\/span><\/a><\/p>\n","protected":false},"author":24,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"ppma_author":[1007],"class_list":["post-2117","post","type-post","status-publish","format-standard","hentry","category-vietnam-general"],"authors":[{"term_id":1007,"user_id":24,"is_guest":0,"slug":"omassmann","display_name":"Dr. Oliver Massmann","avatar_url":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-content\/uploads\/sites\/19\/2014\/08\/massmannoliver-125x150.jpg","author_category":"","last_name":"Massmann","first_name":"Dr. Oliver","job_title":"","user_url":"http:\/\/www.duanemorris.com\/attorneys\/olivermassmann.html","description":"Read Oliver's bio.<\/a>"}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/posts\/2117","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/comments?post=2117"}],"version-history":[{"count":1,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/posts\/2117\/revisions"}],"predecessor-version":[{"id":2118,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/posts\/2117\/revisions\/2118"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/media?parent=2117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/categories?post=2117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/tags?post=2117"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/ppma_author?post=2117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}