As a basic industry of each country, highly competitive in international trade, steel products are the most investigated for trade defense (TDR) in the world. Vietnam is no exception, with exported steel being involved in more than 70 TDR cases.
Focus of trade defense investigation
Vietnam's steel industry has grown strongly in recent years. If the production capacity in the 90s of the last century was only about 200,000 - 300,000 tons of steel/year, it has now increased to 20 million tons of crude steel/year, 28 million tons of finished steel/year, ranking 12th in the world, leading the ASEAN region.
Domestic steel enterprises have produced most of the products that serve the basic needs of the economy, even some products with capacity exceeding demand. The steel industry has ensured supply for economic growth in recent years, completing the value chain from beginning to end, from upstream to downstream.
However, this manufacturing industry is facing many difficulties due to the decline of the real estate sector, leading to reduced demand, high production costs, increased inventories, and fierce competition with imported goods. According to customs data, in 2023, steel imports will reach 13.3 million tons, worth over 10.4 billion USD, up 14.1% in volume compared to 2022.
In the export channel, Vietnamese steel is struggling with trade remedies, including anti-dumping, anti-subsidy, and self-defense, created by import markets.
The Trade Remedies Authority and the Vietnam Steel Association (VSA) said that Vietnam's exports face 252 defense investigations from 24 markets, of which the steel industry has more than 70 cases.
Explaining why steel is the “focus”, accounting for 30% of the total number of trade remedy cases with Vietnam’s export goods, Ms. Nguyen Thi Thu Trang, Director of the WTO and Integration Center (Vietnam Federation of Commerce and Industry - VCCI) said that Vietnam is a highly open economy, participating in many free trade agreements. Integration brings great opportunities for exports, but also has to deal with many trade remedy lawsuits, of which steel is the most sued industry.
“The world has used defense tools on steel very early, for example, the United States applied them in the 30s and 40s of the last century. Just looking at the WTO, in the period 1995 - 2023, there were up to 2,123 anti-dumping lawsuits on steel, not to mention self-defense and anti-subsidy cases, accounting for 32% of the total number of trade defense cases in all WTO members. Vietnamese steel is no exception,” Ms. Trang cited.
Exports more difficult due to green standards
With large production capacity and some products exceeding domestic demand, export is the main consumption channel for steel enterprises. However, along with difficulties in trade remedies and anti-dumping tax measures, the steel industry also faces challenges in green standards from some markets, especially Europe.
Mr. Phan Duc Hieu, Standing Member of the National Assembly's Economic Committee, said that steel is an industry that causes pollution and large emissions, and that production must be greened to reduce emissions. This requirement is not only set by international markets, but also similar domestically.
From October 2023, the European Union (EU) will pilot the Carbon Border Adjustment Mechanism (CBAM). Accordingly, 27 EU member states require reporting of greenhouse gas emissions during the production process for 6 items, including iron and steel exported to this market.
Starting in 2026, importers will be charged a carbon tax if their steel production emissions exceed EU standards. The carbon tax will be calculated based on specific emissions reports.
The EU is the second largest market for Vietnam's steel exports (accounting for 18.37% of turnover), after ASEAN. Last year, steel exports to the EU reached 2.55 million tons, worth 1.89 billion USD, up 86.2% in volume and 29% in value. Therefore, if domestic exporters do not switch to greener production to reduce emissions and meet EU requirements, they will have to pay high carbon taxes, causing a decrease in competitiveness.
Meanwhile, although businesses are aware of the need to produce greener, they face many barriers in converting production technology and changing input factors.
VSA Vice President Pham Cong Thao said that to transform into green production, the steel industry needs support, the industry alone cannot do it.
For example, if we want to green production, all inputs must be green, such as green energy (reducing energy from fossil fuels), and input materials as well.
Steel production is a major emitter. According to the World Steel Association, the steel industry accounts for 79% of CO2 emissions.
“Vietnam sets a Net Zero target by 2050, which sounds long, but for the steel industry it is not long because the pressure for green transformation is huge, requiring large capital, so the State needs to support capital, investment incentives, and reduce interest rates,” said Mr. Thao.
Green transformation puts a lot of pressure on steel companies, but it is also an opportunity in the context of the world raising the demand for greener production. Although it is difficult, the steel industry must transform towards a circular and sustainable economy, if it does not want to be eliminated from the global supply chain.
Source: https://baodautu.vn/kho-khan-bua-vay-doanh-nghiep-nganh-thep-d219771.html
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