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Businesses concerned about ACFTA
Vietnamese businesses have every reason to worry about the ASEAN-China Free Trade Agreement (ACFTA). Chinese products, which have always been rivals to Vietnamese goods, will become even more competitive once Vietnam, as a member of ASEAN, opens its market more widely.
Neighboring threat
According to Nguyen Tien Nghi, Deputy Chairman of the Vietnam Steel Association (VSA), the coil steel market share held by domestic manufacturers decreased in 2009 to 20 percent due to flooding of products from ASEAN countries like Thailand, Malaysia and, most especially, China.
Nghi said that domestic steel producers lost their share to Chinese producers in April 2009, when the Government imposed high import tariffs of 15 percent instead of 12 percent on finished products and eight percent instead of five percent on billet steel.
To date, steel bar remains the least affected by imports. “We are still feeling worried about 2010,” Nghi explained. “It is highly possible that Chinese steel bar will also penetrate Vietnam’s market soon. China now has excess capacity, while Chinese manufacturers are enjoying Government of China policies encouraging export.”
Paper producers also anticipate big difficulties in competing with imports. Cao Tien Vi, Chairman of the Saigon Paper Company, noted that in 2008-2009, packaging paper imported from Indonesia and Taiwan had prices lower than production costs of domestically-made products.
“Only some joint paper ventures with foreign partners still can compete with imports,” Vi asserted.
Vi went on to reveal that other members of the Vietnam Paper Association are also worried about the “threat from China.”
A businessman, who asked to remain anonymous, remarked that Chinese products can “distress” Vietnamese producers even without a free trade agreement. Therefore, one can imagine how much stronger they will be when supported by the free trade agreement.
No safeguards yet
Nghi maintained that domestic producers, who struggle to compete with imports, have pondered the installation of technical barriers to restrict imports. Nghi noted that VSA is joining forces with the Directorate for Standards, Metrology and Quality (STAMEQ) to build standards for construction steel, which is expected to be made public by the end of 2010.
Regarding safeguards, despite their suffering, steel producers have not proposed any measures.
To date, safeguards have been suggested only for floating glass production. Some glass producers have proposed the measures in reaction to a big volume of imports flowing into Vietnam that threatens to kill local production. The case is still under investigation.
An official from the Import-Export Department under the Ministry of Industry and Trade has also confirmed that Vietnam has not set up technical standards sufficient for all industrial fields.
According to the Competition Administration Department, Vietnam has faced 37 commercial lawsuits raised against its products since 1994, including 31 anti-dumping cases. Meanwhile, Vietnam has yet to apply protective measures on imported products.
VietNamNet, TBKTSG
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