Official inaction leaves Vietnam businesses struggling against cheap imports
Many Vietnamese businesses say they have been hurt by cheap imports since the government and industry groups have failed to give them support.
They were speaking at a recent meeting with the Vietnam Competition Authority, where they warned the situation would worsen when Vietnam is obliged to scrap more tariff lines under upcoming free trade agreements.
Vo Van Thanh, deputy CEO of steel producer Hoa Sen Group, said non-tariff trade barriers are supposed to shield local production against the influx of cheap imports, but in Vietnam they are "very weak" due to the lack of an efficient legal framework.
For instance, while Vietnamese steel exporters are subject to tight quality checks in foreign countries, in Vietnam, authorities apply technical standards for imported steel that are not "adequate", meaning poor products can sneak into the local market, he said.
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One of their complaints is that Chinese chrome alloy steel billets are imported tax-free though their minuscule chrome content of 0.3-0.4 percent does not add any value to the billets, meaning they cannot be used for making sophisticated products.
In response, government agencies began to inspect importers of the product and sought to amend regulations to slap a 10 percent import duty on chrome alloy steel.
However, the findings of the investigation have yet to be released and the proposed tax is awaiting feedback from other relevant authorities. Meanwhile, many factories are on the verge of closing down as they cannot sell their products amid the glut caused by the cheap imports from China.
Nguyen Van Toan of the Vietnam Steel Corporation said many of its factories are at risk of shutting down since their products have been undercut by Chinese imports.
'Very slow'
Responding to the businesses' complaints, Nguyen Phuong Nam, deputy chief of the Vietnam Competition Authority, admitted that government agencies have failed to provide efficient support.
They are "very slow" to act on dumping cases, taking more than six months to reach a consensus before filing a complaint with the World Trade Organization, compared to one-two months in Taiwan and three months in the US, he said.
After China depreciated the yuan a few months ago, its products became even cheaper than before, and many countries have slapped anti-dumping taxes on Chinese goods, but Vietnam has been very slack, leaving local industries like steel struggling, he said.
However, he also blamed businesses’ lack of knowledge of the laws.
Many industry groups, also lacking knowledge of safeguard measures and related rules, turned their back on distressed businesses, he said. Some even discouraged businesses from taking legal action, claiming it was impossible to win, he said.
Other challenges Vietnam faces in taking trade remedy against foreign imports are language barriers and the lack of qualified lawyers, he said.
Though Vietnam issued the law on competition in 2004, it has taken remedy against foreign imports in only four cases, he said.
"As a tool for protecting local producers, trade remedies are rarely applied in Vietnam, which puts Vietnamese businesses at a disadvantage."