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Vietnamese steel makers in battle against steep US import duties

The U.S. claims Chinese steel is being processed or shipped through Vietnam to avoid heavy taxes.
The Vietnam Steel Association (VSA) is working with the Ministry of Industry and Trade to protect what Vietnamese authorities call the legitimate rights and interest of local steel producers who have been accused of tax evasion by the U.S. Department of Commerce (DOC).

The DOC said it will apply the same anti-dumping and anti-subsidy rates on corrosion-resistant and cold-rolled steel from Vietnam that it does on the Chinese equivalents if they are produced using Chinese hot-rolled steel.

Although the products receive their corrosion resistant treatment or are cold-rolled in Vietnam, the DOC agreed with claims by American producers that as much as 90 percent of the products' value originates from China, according to Reuters.


Vietnamese cold-rolled steel will face combined preliminary U.S. anti-subsidy and anti-dumping duties of 531 percent, while corrosion-resistant steel will face combined duties of 238 percent. The final duties are expected to be announced on February 16.

The DOC said that after anti-dumping duties were imposed on Chinese steel products in 2015, shipments of cold-rolled steel from Vietnam to the U.S. shot up to $295 million annually from $11 million.

Dismissing the claim, the VSA said the processing of cold-rolled steel and corrosion-resistant steel from hot-rolled steel is a substantial transformation. The process involves many stages, which creates an added value equal to 30-40 percent of the products’ value, it said.

Thus, the U.S. claim is groundless, the VSA stressed.

Nguyen Thanh Trung, CEO of Ton Dong A Corporation, argued against the decision, saying that the company mainly uses materials imported from Japan to produce steel to export to the U.S.

His company is one of four Vietnamese steel makers that have been accused of importing Chinese steel for minor processing before shipping it to the U.S.

Vietnam imported 100,000 tons of hot-rolled steel from China in the first 11 months of this year, which accounted for just 2 percent of the country’s total imports of the product during that time, according to the General Department of Customs.

Commenting on the issue, the Ministry of Industry and Trade said cold-rolled steel and corrosion-resistant steel produced in Vietnam from imported steel should be considered Vietnamese products.

According to the World Trade Organization’s rules of origin, a country is considered the origin of goods if it is where a substantial transformation to create the goods is carried out, it said.

Vietnam affirms that the production of cold-rolled steel and corrosion-resistant steel from imported hot-rolled steel is a substantial transformation, the ministry added. “Thus, there is no tax evasion as claimed by the DOC.”

Diversify markets

The U.S. decision is expected to have negative impacts on Vietnam’s steel industry, said economist Le Dang Doanh. “This is a regrettable decision for Vietnam. The country should make efforts to clarify any doubts held by the U.S., and demonstrate that the steel products it exports to the U.S. do not originate from China.”

He said local steel makers should upgrade their technology and cut production costs to make their products more competitive, while diversifying export markets.

Predicting risks in the U.S. market, some local steel makers have expanded their exports to other markets and sought alternative sources of input material.

Pham Manh Hung, CEO of steel producer Nam Kim, said his company stopped using hot-rolled steel from China after the U.S. launched a formal investigation into whether Chinese companies were shipping steel through Vietnam to avoid import tariffs late last year.

The company has increased its use of products imported from other markets such as India, South Korea and Japan, or those locally produced to avoid risks.

Vietnamese steel products are exported to more than 50 countries and territories, including ASEAN, the E.U., South Korea, India and Taiwan. The country’s steel shipment to the U.S. accounted for 13 percent of its total steel export in the first eight months of this year, lower than the ratio of 27 percent in the same period last year, said the VSA.

Vietnam earned over $2.7 billion from iron and steel exports in the first 11 months, surging 52.8 percent over the same period last year, according to the General Statistics Department.
Source: E.vnexpress

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