VietNamNet Bridge - Vietnamese steel manufacturers oppose the possible imposition of safeguard measures against ingot steel imports, saying that higher taxes will increase prices.

 

Vietnamese steel manufacturers oppose the possible imposition of safeguard measures against ingot steel imports

The Ministry of Industry and Trade (MOIT) on December 25, 2015 released a decision on possibly applying trade remedies against imported ingot steel and long steel products, following proposals by four foreign manufacturers – Hoa Phat, Mien Nam, Thai Nguyen and Viet Y.

The manufacturers proposed to raise the tax to 45 percent on ingot steel and 33 percent on long steel products as a measure to protect local production.

They showed documents to prove that the import volume to Vietnam has been increasing rapidly from 588,000 tons in 2014 to 1.5 million tons in 2015.

The import volume to Vietnam has been increasing rapidly from 588,000 tons in 2014 to 1.5 million tons in 2015.

A group of domestic steel manufacturers voiced their protest against trade remedies on imports, warning that higher taxes would threaten the development of the steel industry in Vietnam.

A petition was lodged with the Prime Minister and relevant ministries by the group of enterprises, including Pomina JSC, NatsteelVina, Vinausteel, SSE, BCH JSC and Viet Duc Company.

They said the high 45 percent tax rate, expected to be applied within 200 days, would lead to unhealthy competition in the market.

In principle, Vietnam can only apply trade remedies after it can prove that the import volume has soared, thus threatening domestic manufacturers, and that there is a link between the sharp import increase and losses incurred by domestic enterprises.

Meanwhile, the companies pointed out that the ingot steel import volume in 2015 was even lower than that in the years before. In 2008-2009, Vietnam imported 2.4 million tons of ingot steel a year, while the volume was just 63 percent of that level, 1.5 million tons, in 2015.

They argued that the domestic market suffered seriously in 2011-2015 because of many reasons, rather than the import increase. One of the major reasons was the oversupply of domestic output, 2-3 times higher than demand. 

Who will benefit if trade remedies are applied? If the import tax on ingot steel increases to 45 percent (it was 9 percent in 2015), the ingot steel price in the domestic market will increase sharply. This would force domestic steel manufacturers, most of which cannot make ingot steel themselves, to rely on a limited number of ingot steel suppliers.

If so, the trade remedies, if applied, would only benefit some ‘big players’ who can control the ingot steel supplies. Meanwhile, the others would have to pay more for ingot steel imports and incur higher production costs.


TBKTSG