Steel exports are struggling because of trade remedy lawsuits

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It is forecast that Vietnamese steel will continue facing a high risk of lawsuits against trade remedies from the markets. Photo: N.Thanh

Two lawsuits in two days

According to the latest data of the General Department of Customs, in July 2022, iron and steel exports of all kinds decreased 28.7% in volume and 29.4% in value compared to June to 613 tons, or more than US$644 million.

Generally, in the first seven months of 2022, Vietnam exported more than 5.4 million tons, worth over US$5.6 billion, down 22.6% in volume and up 1% in value over the same period last year.

Chairman of the Vietnam Steel Association Nghiem Xuan Da said from the beginning of the year, the slow disbursement of public investment has decreased domestic steel demand, affecting consumption. Notably, the world situation has many challenges and unexpected factors, which also means the steel industry is facing many difficulties. Those are increasing protectionism especially in Europe and the US; instability and unpredictability of the Chinese steel market; the conflict between Russia and Ukraine which has pushed up input prices, while product prices continue to fall.

Looking back at the whole picture of steel production and export from the beginning of the year, it is worth noting that this industry is increasingly facing many trade remedy lawsuits.

Typically, on July 28, 2022, the Mexican Ministry of Economy published an official gazette to initiate an anti-dumping investigation against cold rolled steel imported from Vietnam on the basis of a complaint filed by the domestic industry.

The alleged products are cold rolled steel products with HS codes: 7209.16.01, 7209.17.01, 7209.18.01, 7209.26.01, 7209.27.01, 7209.28.01, 7209.90.99, 7211.23.03, 7211.29.99, 7211.90.99, 7225.50.07 and 7226.92.06.

Then, on July 29, 2022, the US Department of Commerce (DOC) announced the initiation of an investigation into trade remedy evasion with respect to a number of steel pipe products, mainly under HS codes 7306.61 and 7306.30 imported from Vietnam.

Plaintiffs are large steel pipe manufacturers in the US accusing Vietnam of importing hot rolled steel (HRS) - the main raw material for the production of steel pipe from China, Taiwan (China), Korea and India then simple processing them into steel pipes and exporting them to the US to avoid the trade remedy duties that the US is applying to China, Taiwan (China), Korea and India.

According to statistics from the Vietnam Steel Association (VSA), from 2004 to July 2022, Vietnam's steel exports faced 68 lawsuits against trade remedies from abroad. In which, there are 38 anti-dumping lawsuits; three anti-subsidy lawsuits; six anti-dumping and anti-subsidy cases; 13 cases of conditions for application of safeguard measures and eight cases against tax evasion.

Actively build "shields"

Ms. Nguyen Cam Trang, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), said that steel enterprises have made great efforts to develop their brands for the world market. They have also actively seized opportunities from Free Trade Agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-EU FTA (EVFTA), etc to promote exports. Steel is in the leading industry group in terms of taking advantage of tariff preferences.

Currently, Vietnam's steel products are present in 30 markets. "Despite many difficulties, the 15 signed and effective FTAs ​​ are opening up great market opportunities for the steel industry," said Ms. Cam Trang.

The VSA’s representative said Vietnam's steel products are currently not only present in the traditional market of Southeast Asian countries but also in more than dozens of countries and territories around the world such as Europe and America. The rapid increase in steel export turnover is the reason why many countries pay attention to and expand the investigation and application of trade remedies.

According to Mr. Le Trieu Dung, Director of the Trade Remedies Department, steel is a commodity that has traditionally been sued. The reason is that all countries have policies to develop their domestic manufacturing industry while steel is the key industry. Steel is also an input of many different industries, so lawsuits or a tax levy on steel products means indirectly protecting other industries.

From the perspective of enterprises, a representative of Ton Dong A Joint Stock Company said that the lawsuits and tax imposition on Vietnam's exported steel products by foreign markets have had a certain influence on the business activities of domestic steel manufacturers.

Many steel plants are restricted from exporting to European countries, the US and Southeast Asia. "It is very likely that this situation will continue for a long time. Each enterprise needs to have its own plan and strategy to respond effectively," he said.

Affirming that the Vietnam Trade Office system abroad has been actively supporting businesses in information connection, trade, promoting exports, and accompanying businesses to effectively respond to trade remedies, Ms. Nguyen Cam Trang said that in order to overcome internal difficulties and take advantage of export opportunities, the steel industry needs to develop and improve the production chain and added value and innovation.

Businesses must improve technology, design, diversify export products, standardize the supply of raw materials to meet the requirements of the import market. Enterprises also need to actively seek opportunities from FTAs ​​on tariff reduction, meet rules of origin and strictly comply with regulations of import markets.

Mr. Nguyen Van Sua, a steel industry expert, noted that most businesses in the steel industry are small and medium-sized, so they have neither good knowledge of nor paid attention to trade remedies. Therefore, when there is information about trade remedy lawsuits, they easily fall into a passive state.

At this time, the initiative and coordination among businesses in the industry and domestic authorities is very important. “Businesses themselves must build a transparent accounting system with knowledge of trade remedies. So that, they will build up a "shield" for themselves against lawsuits from the international market; and protect domestic production against unfair competition from imported goods," said Mr. Sua.

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