Steel needs ‘self-defence’ barrier

Following the WTO participation roadmap, from 2010 onwards, Vietnam steel industry will no longer receive preferential import tariff, and will face much fiercer competition from imported products. To protect domestic products, Vietnam needs technical barrier even if this is not a facile “self-defence” solution.

Imported steel volume from Asean countries, China, and Russia in 2010 has been increasing sharply due to the commitment of tax reduction (of at least 1 percent of each type of goods), mentioned by Vietnam Steel Association (VSA). When there is less support from the state, domestic steel industry will cope with more difficulties and find it hard to compete with imported steel.

In recent years, apart from importing waste steel and steel billets, which were the main inputs for production, importing other products that can be manufactured domestically like construction steel, galvanised steel, cold-rolled steel, etc.
has caused disadvantages to the steel industry. Whenever competing with imported steel, domestic steel firms petitioned the government and governance authorities for protection. In 2009, under the pressure from imported steel, not less than three times they called for supports from the government, ministry of industry and trade and VSA. The competition is shown more clearly when in the first four months of 2010, there have been 1.75 million tonnes of steel of all kinds imported, including 150,000 tonnes of cold-scrolled steel, 834,694 tonnes of hot-scrolled steel and 144,000 tonnes of rolled steel. Especially, there are numbers of the above-mentioned products were in excess in the domestic.

According to Ministry of Industry and Trade, it is essential to issue Vietnam standard code on cold-rolled steel. This is not only for domestic brands protection but also for products classification and ranking. It is also a condition, a pressure for steel firms to invest in modern technology. This barrier has been used by developed countries to restrain imported products and protect domestic ones. America has applied taxation policy to Chinese products. The EU has also applied anti-dumping tariffs to iron, steel and steel pipes imported from China, Thailand, Malaysia and Indonesia, etc. Previously, VSA issued official document to the governmental office and other ministries and agencies regarding domestic steel protection and timely preventive measures. According to that, Ministry of industry and trade and Ministry of science and technology will soon issue the Vietnam standard code on cold-rolled steel and the customs clearance regulations to avoid mass imports and trade frauds. Nevertheless, there is a question on how the criterion and standards need to be developed in order to both harmonise interests and protect domestic production from great competition of imported steel and not to give a hard time to firms. In addition, the issuing time also needs to be considered for the standard code to become a motivation to encourage domestic production. However, the Vietnam standard code and its feasibility are in processing time.

One solution is optimal at this time is that the steel producers print logo, technical and quality information directly on their products, not just the outside packaging. That is for the consumers to easily identify and have sufficient information about the products. It is also the basis for inspecting and detecting poor-quality products. Along with the point that the steel producers enhance competitive advantages by using modern technology and pricing their products lower; the government should give support and facilitate them with administrative procedures reduction.

Since technical barrier will also be applied to domestic products, domestic firms will certainly face many obstacles, said VSA. Those may be the limitation of technological equipments of the steel industry, the worries that technical barrier may push up the costs, price control hindrances; or providers want to keep the best technology for competitive advantages, etc. With such obstacles, if the technical standards were to be developed too high, too strict by international standards, with the most modern technologies, only a few domestic firms would be able to satisfy.

Hanoimoi

Tags: Vietnam steel industry, Vietnam steel market