VSA opposes hike in import duties on HRC steel
VSA opposes hike in import duties on HRC steel
The Vietnam Steel Association (VSA) has objected to a proposal to hike the Most Favored Nations import duties on hot-rolled coil (HRC) steel from 0% to 5%.
The Ministry of Finance has collected feedback for a draft amendment to Decree No.125 to raise the import duties, aiming to increase the State budget collection by over US$130 million and to restrict the import of Chinese steel, reported Nguoi Lao Dong newspaper.
In response, the association said that the tax hike will not limit the supply of Chinese steel but will create chances for the volume of steel exports from China to Vietnam to surge.
As both countries have participated in the ASEAN-China Free Trade Agreement, Chinese HRC steel enjoys a preferential import tariff of 0% in Vietnam under the trade pact.
Accordingly, the import tariff imposed on Chinese steel will stay at 0% if the Most Favored Nations import duty on this product is raised to 5%.
VSA cited data for the first five months of the year as saying that the volume of Chinese HRC steel accounted for 35% of the country’s total steel imports, followed by India and other markets.
The tax hike of 5%, in turn, will restrict the supply of steel from India and Brazil.
Further, Vietnam has yet to sign free trade agreements or make any commitments on preferential import duties for steel suppliers from India and Brazil, leaving them to struggle to compete with the Chinese supplier on the local market.
As a result, the volume of HRC steel made in China will make up at least 70% of the steel being shipped to Vietnam, stated the association.
Moreover, the tax hike will create additional obstacles for local manufacturers of cold-rolled steel, galvanized sheet steel and steel rolls. They will face restricted steel supplies while domestic production fails to meet the market demand.
The country’s demand for HRC steel ranges from 10 million to 11 million tons annually, but the maximum output that local steel firms can generate is some four million tons per year, or some 30%.
Local steel production currently meets a mere 10%-13% of the country’s annual demand.
The association has petitioned the finance ministry not to hike the Most Favored Nations import duties on this metal and the Ministry of Industry and Trade not to apply safeguard measures to the product.
