Vietnam Steel Association accuses China of trade fraud

20 October 2015

The Viet Nam Steel Association has accused China of committing trade fraud in exporting steel ingots to Viet Nam, causing losses of millions of US dollars to the State budget.

In a document sent to the ministries of industry and trade, finance, and science and technology last week, the association said that cheap steel ingots from China were flooding the domestic market and that several exporters cheated to enjoy tax rate gaps.

"This is not the first time that cheap steel ingots from China have flooded the domestic market, burdening local producers. Exporters are taking advantages of tax policies to commit fraud," the association said.

During August and September, the association said parts of steel ingots from China were added with chrome to be turned into alloy to enjoy zero tax rate, instead of the tax rate of 9 per cent imposed on steel ingots for construction.

The association cited customs statistics showing that import of steel ingots containing chrome reached 3,000 tonnes in August and dramatically increased to 62,000 tonnes in September, anticipating a continued rise in the remaining months of the year if no action was taken.

The two-month import alone worth US$21 million steel ingots containing chrome would cause a loss of $1.9 million to the State budget, the association estimated.

The entry of cheap imported steel ingots into the domestic market was burdening local production which was now running at only 60 per cent of 11-million-tonne design capacity. If the situation was not improved, local producers would face further difficulty, amid a Chinese economy slowdown forcing the country to expand exports as the domestic demand fell.

The association proposed the management of imported steel ingots containing chrome to be tightened. If the steel ingots were used to produce construction steel, the tax rate of 9 per cent must be imposed, said the association.

Nguyen Van Sua, the association's vice chairman, said steel alloys containing less than 0.3 per cent of chrome could be used as normal steel ingots. The use of trade defence instruments should be considered to prevent trade frauds and unhealthy competition.

Customs statistics showed that as of mid-September, Viet Nam imported 1.1 million tonnes of steel ingots, nearly tripling the volume of the same period last year, 75 per cent of which came from China.