DECISION

ON APPLICATION OF TEMPORARY SAFEGUARD MEASURES

MINISTER OF INDUSTRY AND TRADE

Pursuant to the Ordinance No. 42/2002/PL-UBTVQH10 dated May 25, 2002 of the Standing Committee of the National Assembly on safeguards in the import of foreign goods into Vietnam;

Pursuant to the Government’s Decree No. 150/2003/ND-CP dated December 08, 2003 detailing the implementation of the Ordinance on safeguards in the import of foreign goods into Vietnam;

Pursuant to the Government’s Decree No. 95/2012/ND-CP dated November 12, 2012 defining functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Decision No. 848/QD-BCT dated February 05, 2013 of the Minister of Industry and Trade defining functions, tasks, powers and organizational structure of the Vietnam Competition Authority (VCA);

At the request of the Director General of the Vietnam Competition Authority,

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Article 1. Temporary safeguard measures shall apply to the import of steel blanks and long steels from different countries/territories into Vietnam with contents detailed in the Notice enclosed to this Decision.

Article 2. Procedures for applying temporary safeguard measures shall comply with the law on safeguards in the import of foreign goods into Vietnam.

Article 3. This decision shall take effect after 15 days as of the signing date.

Article 4. The General Director of Vietnam Competition Authority and Heads of relevant units/parties are responsible for executing this Decision.

PP. MINISTER
DEPUTY MINISTER




Tran Quoc Khanh

NOTICE

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Pursuant to the Ordinance No. 42/2002/PL-UBTVQH10 dated May 25, 2002 of the Standing Committee of the National Assembly on safeguards in the import of foreign goods into Vietnam and the Government’s Decree No. 150/2003/ND-CP dated December 08, 2003 detailing the implementation of the Ordinance on safeguards in the import of foreign goods into Vietnam, the Ministry of Industry and Trade does announce detailed contents of applying temporary safeguard measures against the import of steel blanks and long steels with HS codes: 7207.11.00; 7207.19.00; 7207.20.29; 7207.20.99; 7224.90.00; 7213.10.00; 7213.91.20; 7214.20.31; 7214.20.41; 7227.90.00; 7228.30.10; 9811.00.00 into Vietnam. To be specific:

1. Basic information

On December 25, 2015, the Ministry of Industry and Trade has promulgated the Decision No. 14296/QD-BCT on investigation into the safeguard measures against the import of steel blanks and long steels from different countries/territories into Vietnam.

2. Imported products against which temporary safeguard measures are applied

Imported products against which temporary safeguard measures are applied include alloy and non-alloy steel blanks, and alloy and non-alloy long steel products, including coils and bars of steel that are made of steel blanks, imported into Vietnam with the following HS codes: 7207.11.00; 7207.19.00; 7207.20.29; 7207.20.99; 7224.90.00; 7213.10.00; 7213.91.20; 7214.20.31; 7214.20.41; 7227.90.00; 7228.30.10; 9811.00.00.

Steel blanks and long steel products that have the following specifications shall not apply temporary safeguard measures:

(1) Alloy steel blanks, which are not stainless steel, do not have rectangular (and square) cross-section, have a width exceeding twice of the thickness and average dimensions of width and thickness not exceeding 100mm or exceeding 180mm;

(2) Alloy steel blanks, which are not stainless steel containing one of the following elements in the specified proportions (%) as follows: C > 0.37%; Si > 0.60%; Cr > 0.60%; Ni > 0.60%; Cu > 0.60%;

(3) Plain round bars of steel whose nominal diameter exceeds 14 mm;

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For being exempted from temporary safeguard measures, importers of steel blanks and long steel products must provide documents proving that their imported products have satisfied specifications for being exempted from temporary safeguard measures as stated above to the customs authorities.

3. Temporary safeguard tax rates

The Ministry of Industry and Trade shall impose temporary safeguard measures under form of import surcharges on imports into Vietnam, against which temporary safeguard measures are applied with specific tax rates as follows:

3.1. Temporary safeguard tax rate applicable to steel blanks

The temporary safeguard tax rate imposed on steel blanks shall be 23.3% and apply under form of import surcharges to products imported to Vietnam with specific HS codes as follows:

No.

HS code

Description

7207

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7207.11.00

- - Of rectangular (including square) cross-section, the width measuring less than twice the thickness

2

7207.19.00

- - Other

7207.20

- Containing by weight 0.25% or more of carbon

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 - - - - Other

4

7207.20.99

 - - - - Other

7224

Other alloy steel in ingots or other primary forms; semi-finished products of other alloy steel.

5

7224.90.00

- Other

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The temporary safeguard tax rate applicable to long steel products shall be 14.2% and apply under form of import surcharge to products imported to Vietnam with specific HS codes as follows:

No.

HS code

Description

7213

Bars and rods, hot-rolled, in irregularly wound coils, of iron or non-alloy steel.

1

7213.10.00

- Containing indentations, ribs, grooves or other deformations produced during the rolling process

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7213.91.20

 - - - Of a kind used for concrete reinforcement (rebars)

7214

Other bars and rods of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but including those twisted after rolling.

7214.20

- Containing indentations, ribs, grooves or other deformations produced during the rolling process or twisted after rolling:

- - Containing by weight less than 0.6% of carbon:

- - - Of circular cross-section:

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- - - - Of a kind used for concrete reinforcement (rebars)

4

7214.20.41

- - - - Of a kind used for concrete reinforcement (rebars)

7227

Bars and rods, hot-rolled, in irregularly wound coils, of other alloy steel.

5

7227.90.00

- Other

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Other and rods of other alloy steel; angles, shapes and sections, of other alloy steel; hollow drill bars and rods, of alloy or non-alloy steel

7228.30

- Other bars and rods, not further worked than hot-rolled, hot-drawn or extruded:

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7228.30.10

- - Of circular cross-section

9811

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Alloy steel containing Boron and/or Chromium, other than categories of flat-rolled steel products that are hot-rolled.

4. Countries/territories that are exempted from temporary safeguard measures

Pursuant to Article 13 of the Government’s Decree No. 150/2003/ND-CP dated December 08, 2003 detailing the implementation of the Ordinance on safeguards in the import of foreign goods into Vietnam, temporary safeguard measures shall be imposed on products imported from all countries/territories to Vietnam, except for developing countries and less-developed countries whose quantity of products exported to Vietnam does not exceed 3% of total quantity of products imported to Vietnam from all countries/territories. List of countries/territories that are exempted from temporary safeguard measures is stated in the Annex 1 of this Notice.

For being exempted from temporary safeguard measures as stated above, importers of steel blanks and long steel products must provide the documents proving origin of their imported products to the customs authorities, including:

- Certificate of Origin, in which imported products are specified to have origin from countries/territories stated in the Annex 1 of this Notice;

- Mill-test certificate issued by the manufacturer whose production activities occur in countries/territories stated in the Annex 1 of this Notice.

5. Effective date of temporary safeguard measures

Temporary safeguard measures shall begin to take effect after 15 days from the date on which the Ministry of Industry and Trade made the decision on application of temporary safeguard measures; in other words, from March 22, 2016.

6. Duration of temporary safeguard measures

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In case the final decision granted by the Minister of Industry and Trade defines that the application of temporary safeguard measures is unnecessary or the last safeguard tax rate is lower than the applied safeguard tax rate, the different amount of such tax shall be returned to the taxpayers as regulated by laws.

7. Grounds for applying temporary safeguard measures

Based on the information provided by relevant parties and the aforesaid analysis on this matter, the investigation authority gives assessments as follows:

- Domestic production sector that is composed of domestic manufacturers of steel blanks and long steel products holds more than 50% of total output of the whole sector.

- Domestically produced goods are like imported products.

- Quantity of steel blanks and long steel products imported to Vietnam manifests the increase in both absolute and relative terms during the investigation.

- Domestic production sector has incurred serious damage such as reduction of market share, capacity, revenue, profit and workforce and increase of inventories in the period 2012 - 2015, especially in 2015.

- The increase of import volume of goods causes serious damage to the domestic production sector.

- The China’s economic crisis during the past period and the excess of production capacity and real output associated with the large amount of Chinese steel inventories; and the event that some countries apply safeguard measures against imported steel blanks and long steel products are considered as “unforeseen developments" and causes of sudden increase of the import volume into Vietnam.

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8. Subsequent procedures

For the purpose of bringing this matter into a conclusion, the investigation authority shall continue to work with relevant parties to collect more evidence and documents for carrying out a general assessment on this matter. The investigation authority shall conduct a public hearing with parties related to this matter before the investigation comes into an end. Time of the public hearing shall be informed to concerned parties by 30 days before such public hearing takes place. Concerned parties must send letters of registration for participating in the public hearing to the investigation authority within 10 days before the conducting date of such public hearing, in which questionable matters and written arguments thereof must be specified.

Concerned parties may be absent from the public hearing. If either party is absent from the public hearing, such party’s benefits that accrue from safeguard measures are still ensured.

9. Contact information

The information about the decision on application of temporary safeguard measures against the import of steel blanks and long steel products is available at the website of the Ministry of Industry and Trade (http://www.moit.gov.vn) and the website of the Vietnam Competition Authority (http://www.vca.gov.vn or http://www.qlct.gov.vn).

Concerned information and comments should be sent to:

The Trade Remedies Investigation Division - the Vietnam Competition Authority - the Ministry of Industry and Trade

Address: 25 Ngo Quyen Street, Hoan Kiem District, Hanoi City, Vietnam

Tel.: (+84 4) 222.05002 (Ext. 1035) (Ms. Phan Mai Quynh)

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Email: quynhpm@moit.gov.vn; or ninhtt@moit.gov.vn.

ANNEX 1

(Enclosed to the Notice of the enforcement of temporary safeguard measures

Enclosed to the Decision No. 862/QD-BCT dated March 07, 2016 of the Minister of Industry and Trade)

1. Sub-Saharan Africa

Angola

Madagascar

Nigeria

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Malawi

Rwanda

Botswana

Mali

Sao Tome and Principe

Burkina Faso

Mauritania

Senegal

Burundi

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Sierra Leone

Cabo Verde

Mozambique

Somalia

Cameroon

Namibia

South Africa

Central African Republic

Niger

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Chad

Gabon

Sudan

Comoros

Gambia, The

Swaziland

Congo, Dem. Rep.

Ghana

Tanzania

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Guinea

Togo

Cote d'Ivoire

Guinea-Bissau

Uganda

Eritrea

Kenya

Zambia

Ethiopia

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Zimbabwe

Liberia

2. Asia Pacific

American Samoa

Myanmar

Cambodia

Palau

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Papua New Guinea

Indonesia

Philippines

Kiribati

Samoa

Korea, Dem. Rep.

Solomon Islands

Lao PDR

Thailand

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Timor-Leste

Marshall Islands

Tonga

Micronesia, Fed. Sts.

Tuvalu

Mongolia

Vanuatu

Albania

Macedonia, FYR

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Moldova

Azerbaijan

Montenegro

Belarus

Romania

Bosnia and Herzegovina

Serbia

Bulgaria

Tajikistan

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Turkey

Kazakhstan

Turkmenistan

Kosovo

Ukraine

Kyrgyz Republic

Uzbekistan

4. Latin America and Caribbean

Belize

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Bolivia

Haiti

Brazil

Honduras

Colombia

Jamaica

Costa Rica

Mexico

Cuba

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 Dominica

Panama

Dominican Republic

Paraguay

Ecuador

Peru

El Salvador

St. Lucia

Grenada

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Guatemala

Suriname

5. Middle East and North Africa

 Algeria

 Libya

Djibouti

Morocco

Egypt, Arab Rep.

Syrian Arab Republic

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Tunisia

Iraq

West Bank and Gaza

Jordan

Yemen, Rep.

Lebanon

6. South Asia

Afghanistan

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Bangladesh

Nepal

Bhutan

Pakistan

India

Sri Lanka

ANNEX 2

(Enclosed to the Notice of the enforcement of temporary safeguard measures

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PRELIMINARY REPORT

(Public summary)

1. Overview

On December 15, 2015, the Vietnam Competition Authority (referred to as the investigation authority) – the Ministry of Industry and Trade has received the applications for imposition of safeguard measures on the import of steel blanks and long steel products into Vietnam (referred to as the application) with the following HS codes: 7207.11.00; 7207.19.00; 7207.20.29; 7207.20.99; 7224.90.00; 7213.10.00; 7213.91.20; 7214.20.31; 7214.20.41; 7227.90.00; 7228.30.10; 9811.00.00 (referred to as products under investigation), submitted by 4 domestic steel manufacturers, including Hoa Phat Steel Joint Stock Company, Southern Steel Company (SSC), Thai Nguyen Iron and Steel Joint Stock Corporation (TISCO) and Vietnam Italy Steel Joint Stock Company.

 On December 18, 2015, the investigation authority has promulgated the Official Dispatch No. 1120/QLCT-P2 to confirm that the application is sufficient and valid.

 On December 25, 2015, the Minister of Industry and Trade has signed the Decision No. 14296/QD-BCT to carry out the investigation into safeguard measures against products under investigation.

On December 30, 2015, the investigation authority has sent questionnaires to concerned parties. Time-limit for answering the questionnaire is 30 days as of the sending date of questionnaires; in other words, by 17:00 o'clock on January 29, 2016. Moreover, based on suggestions of certain concerned enterprises, the investigation authority has given extension for answering questionnaire to each specific enterprise.

The investigation authority has conducted the on-spot investigation into domestic producers of like and directly competing products from January 29, 2016 to February 23, 2016 on the grounds of consideration and study on information included in questionnaires provided by concerned parties.

Enterprises that have received questionnaires but failed to answer or partially answered the questionnaire are considered as uncooperative as regulated. The investigation authority did not consider information provided by concerned parties who fail in cooperation or give partial cooperation.

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For the purpose of carrying out the analysis on effects on price of imported products, the investigation authority has calculated and compared the selling price of imported products on the Vietnam’s market with that of domestically produced goods (ex-factory price) on the grounds of figures provided by the General Department of Vietnam Customs and questionnaire responses of importers and domestic producers.

The selling price of imported products shall be calculated by adding the average import price (including import tax) and import expenses provided by importers. The investigation authority has considered figures of volume and value of imported goods (including import tax amount) provided by the General Department of Vietnam Customs to work out the average import price of products under investigation. The investigation has carried out the analysis on effects on price of steel blanks and long steel products on the grounds of the aforesaid methods of calculation. To be specific:

2.1. Steel blanks

 In terms of price squeeze, the selling price of domestic goods trended to decline at gradual rate in 3 years from 2012 to 2014. In 2014, the selling price of domestic goods trended to keep stable price and slightly declined while the selling price of imported products trended to decline rapidly. Therefore, the selling price of imported products in 2014 started to be lower than that of domestic goods although the selling price of imported products was still higher than that of domestic goods in 2012 and in 2013.

However, the selling price of imported products in 2015 suddenly and rapidly declined by almost 30% (the fastest rate of decline in the period 2012 – 2015) and resulted in causing high pressure on the selling price of domestic goods. Though the domestic selling price in 2015 has significantly declined under the pressure of imported products, it was still higher than the selling price of imported products. Such facts demonstrated that imported products put a squeeze on the selling price of domestic goods.

In terms of price manipulation, the domestic selling price has changed according to the general trend in which production costs trended to decline at a more rapid rate compared to that of the domestic selling price in 3 years from 2012 to 2014. However, this trend has suddenly changed in 2015. Though domestic production costs only declined in a slight rate compared to that in 2014, the domestic selling price deeply nosedived. Such rate of decline showed that there was a very little difference between the domestic selling price and production costs in 2015, and domestic producers almost earned no profit. Such facts caused the influence on business results of domestic production sector in 2015. Based on the aforesaid analysis, the investigation authority uncovered the manipulation of the price of domestic goods.

2.2. Long steel products

Until 2015, the selling price of imported products suddenly dropped down by more than 20% and this was the fastest rate of decline in the period 2012 – 2015. Under the high pressure of imported products in 2015, the domestic selling price also declined significantly to compete with imported products. However, the selling price of domestic goods was still higher than that of imported products. Such facts demonstrated that imported products put a squeeze on the selling price of domestic goods.

In terms of price manipulation, the domestic selling price has changed according to the general trend in which production costs trended to decline at a more rapid rate compared to that of the domestic selling price in 3 years from 2012 to 2014. Contrary to this trend, domestic production costs in 2015 only declined in a slight rate compared to that in 2014 and the domestic selling price deeply nosedived by nearly 25%. The fact that the rate of decline of the selling price was more rapid than that of production costs showed that the domestic production sector was facing difficulties and pressure on competition with imported products.

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In terms of absolute increase, based on import figures provided by the General Department of Vietnam Customs, the volume of imported steel blanks into Vietnam continuously increased from 348,872 metric tons in 2013 to 592,033 metric tons in 2014 (increased by 69.70%) and reached 1,885,981 metric tons in 2015 (increased by 218% compared to that in 2014 and by 440% compared to that in 2013). The volume of imported long steel products into Vietnam also continuously increased from 387,448 metric tons in 2012 to 665,679 metric tons in 2013, and reached 872,119 metric tons in 2014 and 1,282,090 metric tons in 2015 (increased by 231% compared to that in 2012).

In terms of relative increase, the rate of increase of the volume of imported steel blanks was always higher than that of domestic producers’ sales in the domestic market in the period 2013 – 2015. Especially in 2015, the volume of steel blanks imported from countries/territories increased by 218% while domestic producers’ total sales in the local market only increased by [5-10] % compared to that of the previous year, leading to the relative increase of imported products by more than 200% compared to that of domestic producers' sales in the domestic market.

The rate of increase of the volume of imported long steel products was always higher than that of domestic producers’ sales in the domestic market in the period 2013 – 2015. The highest rate of increase of domestic producers’ sales in the domestic market reached [15-25] % in 2015 compared to that of 2014 while total volume of imported long steel products in 2015 increased by 47.01% compared to that of 2014, leading to the relative increase of imported products by more than 20% compared to that of domestic producers' sales in the domestic market.

4. Preliminary conclusion on damage of domestic production sector

The investigation authority has carried out assessment on all factors, including market share, changes of sales, production, capacity, capacity utilization, profit, loss and employment while the investigation authority carried out the assessment on serious damage or threats causing serious damage to domestic production as regulated in Article 4.2 of the Agreement on safeguard measures. After considering and analyzing the aforesaid factors, the investigation authority came to the preliminary conclusion as follows:

- The price of imported products caused the squeeze and curb on the price of domestic like products;

- The production output of steel blanks increased slightly in 2015 but the growth rate thereof declined considerably compared to that of previous years.

- Steel blank production increased in the period 2012 – 2014 but significantly declined in 2015;

- Sales of steel blanks increased in 2015 but this rate of increase was still lower than the growth rate of total domestic demand.

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- Buildup of unsold steel blanks and long steel products in 2015 is very serious. Buildup of unsold steel blanks in 2015 increased by 37% compared to that of 2014 while buildup of unsold long steel products increased by 39% compared to that of 2014, accounting for nearly 10% of total production output of the whole sector in 2015.

- The market share of steel blanks and long steel products continuously declined in the period 2013-2015 and fell to the bottom in 2015. But the market share of imported products continuously increased in the period 2012-2015.

- Although domestic producers’ sales of steel blanks and long steel products increased in 2015, sales in 2015 declined in comparison with that in 2014.

- In terms of profits, producers of steel blanks sustained heavy loss in 2015 although they still earned profits in 2014. Profits on long steel products in 2015 significantly declined in comparison with that in 2014 as well as that in the period 2012 – 2014.

- The number of workers increased from 2012 to 2014 but it started to decline slightly in 2015 in the whole sector of steel blanks and long steel products.

- Additionally, certain indexes did not show heavy damage or threads causing serious damage to domestic production sector, including: production output of long steel products, long steels production and wage index.

Thus, in general, business activities of domestic production sector underwent insignificant progress and were relatively stable in the period 2011 - 2014. However, the analysis on indexes for assessing damage demonstrated that all business activities of domestic production sector in 2015 started to decline considerably. This fact showed that the domestic production was facing serious damage.

5. Preliminary conclusion on relationship between cause and effect

The information and evidence collected by the investigation authority and aforesaid analysis and assessment demonstrated the clear relationship between the sudden increase of the volume of imported products and serious damage to the domestic production. To be specific:

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- The quantity demanded of the whole market increased in the period 2012-2014 and significantly increased in 2015. However, the domestic production output of long steel products only increased in proportion to an increase in quantity demanded though the increased of the domestic production output of steel blanks was even lower than that of total demand, proving that the quantity demanded in the market did not cause damage to the domestic production;

- In the period 2012 – 2015, the labour productivity in the production of both steel blanks and long steel products considerably increased, proving that damage to the domestic production were not caused by the poor labour productivity;

- Domestic steel producers’ export volume was relatively stable in the period 2012-2015 and only held about [3-6] % of revenue of all domestic producers. Thus, the export did not cause damage to domestic production;

- Other factors such as science, technology and product quality, etc. of domestic producers were stable during the past period and caused no damage to the domestic production.

As a result, sudden and rapid increase of imported products was the main cause of serious damage to the domestic producers of both steel blanks and long steel products.

6. Preliminary conclusion on unforeseen developments

The China’s economic crisis during the past period and the excess of production capacity and real output associated with the large amount of Chinese steel inventories;

In 2015, the Central Bank of China has continuously devalued the renminbi to enhance the export of China. The price of exported products of China was also relatively cheaper than that of other countries, leading to difficulties of our production industry in general and the steel industry in particular in competition with exported steel products of China.

Additionally, the event that some countries applied safeguard measures against imported steel blanks and long steel products was also considered as “unforeseen developments" and causes of sudden increase of the volume of imported products into Vietnam.

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According to the information stated in the above parts, the increase of imported products has caused serious damage to domestic producers. This was proved by the decline of the market share, profit, capacity, workforce and the increase of steel inventories. Especially, this decline was significant in 2015 and trended to be more considerable in the next period. If this situation continues, the market share held by domestic producers of steel blanks and long steel products shall continuously fall down, leading decline of revenue and profits and bring production to a standstill.