Vietnamese steel faces risk of being imposed huge tax by Europe

Five months ago, on March 26, 2018, the European Commission (EC) decided to initiate an investigation to apply safeguard measures on 28 groups of imported steel products.

The reason is that the EC is concerned that the increase in imports could cause damage to the domestic manufacturing industry. Import activities of iron and steel originating from Vietnam (VN) are also subject to investigation under this decision.

Based on the results of the preliminary investigation, the EC decided to apply temporary safeguard measures in the form of tariff quotas on 23/28 groups of imported steel products under investigation.

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Each product group has its own quota, calculated based on the average of the total exports of the countries to the EU in the last three years (2015 - 2017).

The provisional safeguard measure is valid for 200 days (from 19 July 2018 to 3 February 2019). After that, based on the final investigation results, the EC will decide whether to apply definitive safeguard measures.

Pursuant to the provisions of Article 9.1 of the WTO Safeguard Agreement on excluding developing countries from measures if their import market share is insignificant (less than 3%), Vietnam is only subject to tariff quota measures for 3/23 product groups including: cold-rolled alloy and non-alloy steel; metal-coated steel sheets; cold-rolled stainless steel sheets and bars.

For the remaining 20 product groups, products imported from Vietnam to the EU are temporarily excluded from the scope of application of the measure (not subject to quotas and not subject to the additional 25% over-quota tax rate).

If Vietnamese steel imports into Europe exceed 3%, safeguard measures may be applied.

However, if during the period of application of temporary safeguard measures, imports of these products from Vietnam increase by more than 3%, Vietnam will face the risk of not being eliminated when the EC decides to apply official safeguard measures (after February 3, 2019).

To warn of the possibility of exports exceeding the 3% threshold and being at risk of being officially applied safeguard measures by the EU, the Trade Defense Department will publish monthly export data to the EU to support Vietnamese businesses and authorities in monitoring the export situation of steel product groups to the EU and taking appropriate control measures.

Safeguard measures are temporary restrictions on imports of one or more goods when their rapid increase in imports causes or threatens to cause serious damage to the domestic industry.

Every importing country that is a WTO member has the right to apply safeguard measures, but when applying them, they must ensure compliance with WTO regulations (on conditions, procedures, and methods of applying safeguard measures).