A worker arranges rolls of sheet steel stored in a warehouse. Photo by Diep Duc Minh
An anti-dumping lawsuit filed by two major stainless steel producers against foreign material has been condemned by businesses depending on the imports as a move to monopolize the market.
The Ministry of Industry and Trade last week received a petition filed by 18 major home appliance and construction material producers to discard the lawsuit.
Hanoi-based Inox Hoa Binh and South Korea's Posco VST, which hold a total 80 percent share of the local stainless steel market, in June demanded that stainless steel imports from China and Indonesia be slapped with a 20-40 percent anti-dumping tax as they cost up to 25 percent less than local products.
A probe into the matter was opened in July and the ministry's Vietnam Competition Authority announced that initial finding would be made public in December.
But the 18 companies that lodged the petition request said the lawsuit contained several "abnormal points" and should be scrapped immediately and entirely.
They said Posco VST is in no position to file the lawsuit as the company is importing a large amount of stainless steel itself, around 39,000 tons since last year, from other members of Posco like Posco China in Hong Kong, Daewoo International Corporation in Korea and Posco-Thainox in Bangkok.
The company imports hot rolled stainless steel coils and processes them in their cold rolling plant.
Inox Hoa Binh takes similar imports from China and Indonesia.
Also, the companies are supplying only a certain kinds of stainless steel products, so they cannot guarantee supply while asking to impose anti-dumping taxes on all stainless steel imports, the petition said.
"[They] do not meet conditions needed to file the lawsuit on behalf of the domestic industry according to the WTO as well as Vietnamese regulations."
Luu Quoc Duy, general director of Taiwan-owned Ever Force Industrial Company, which produces pipes and couplings in Ho Chi Minh City and is a signatory against the lawsuit, said such a move would only be valid if foreign stainless steel was hindering the growth of stainless steel production at home.
But that is not happening since Vietnam is not a producer and all stainless steel is imported, Duy said.
"Posco VST processes materials from its mother company but sells them for more than other imports."
As it already dominates the stainless steel market in the country, Posco VST and Inox Hoa Binh could take over the entire market if their request to rule out imports is passed, the petition said.
It said the lawsuit is likely to serve Posco VST, to save the market for its Posco counterparts, especially the one nearby in Thailand.
Signatories to the petition, representing more than 10,000 staff, emphasized how much the economy could suffer from such an imposition.
Signatory Dam Quang Hung, deputy director of Hanoi-based inox tub producer Son Ha, said the prices of inox products would increase, and, in this time of tight consumption, worsen production stagnation as well as unemployment.
Hung said stainless steel accounts for 80 percent of product prices and the anti-dumping tax will increase the prices by a further 15-30 percent.
"In this difficult time, customers will hardly accept such a steep hike."
At a July conference about awakening the use of anti-dumping legislation to protect businesses in their home market, experts praised Posco VST and Inox Hoa Binh for taking the initiative to file the first lawsuit of its kind in Vietnam. Vietnamese businesses have previously only used legal measures when petitions are filed against them.
But analysts said the current controversy is not simply a case of local versus foreign businesses.
Lawyer Tran Huu Huynh, chairman of Vietnam International Arbitration Center, said that although self-protection is encouraged, the government needs to look at it carefully as it involves conflicts at home.
Vietnam's economy now largely relies on material imports. True producers are few, but there are processors, and the conflict between them and importers will continue, Huynh said, adding that the result of the on-going case will set the standard.
"Any flaws in dealing with this case will leave long-term impacts on the interests of both sides."
Lawyer Pham Van Chat from the center expressed sympathy with the lawsuit's detractors.
Chat said it's the market rule that businesses buy materials that help produce better goods.
"Surely, businesses will not support materials at home that are more expensive than what they can buy abroad, especially when both have the same quality."
Economist Nguyen Minh Phong said Vietnam Steel Association should take on its responsibility in mediating the conflict.
Phong said an anti-dumping lawsuit should have received consensus at home before it is lodged against foreigners.
He said Vietnam's first anti-dumping lawsuit is likely to set a bad first example.
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