The Vietnam Competition Administration Department (VCAD) of the Ministry of Industry and Trade (MOIT) issued its final report on February 8, 2010, in the country’s first trade remedy case. The case involved imports of float glass products from several countries.
MOIT’s Final Determination
Based on VCAD’s final report, on February23, 2010, the MOIT issued Decision 089 with immediate effect, announcing that the Vietnamese government will not apply safeguard measures on float glass products imported from various countries/territories into Vietnam under HS codes 7005 29 90 00 and 7005 21 90 00.
Decision 890/QD-BCT together with the MOIT’s final report (in Vietnamese only) can be downloaded here.
Vietnam's First Trade Remedy Case
The legal bases for the application of a safeguard measure in Vietnam are the Ordinance on Self-protection in Import of Foreign Goods into Vietnam dated May 22, 2002, and Decree No. 150/2003/ND-CP dated December 8, 2003, which provides detailed implementation regulations for the Ordinance. Though these legal documents were issued several years ago, this case marks the first time Vietnam has conducted a trade remedy case.
Facts and Investigative Process
On May 5, 2009, VCAD received an application requesting an investigation initiation and the imposition of safeguard measures on imported float glass products classified under HS codes 7005 29 90 00 and 7005 21 90 00. The application was filed by the Construction Glass and Ceramics Corporation, representing Viglacera Float Glass Company and Vietnam Float Glass Company (hereinafter referred to as "Petitioners"). According to Petitioners, such measures were needed to defend Vietnam’s float glass industry from serious injury caused by increased imports of these products. On June 1, 2009, the MOIT announced that the Petitioners' application had been accepted.
The Petitioners requested application of two safeguard measures:
(i) Imposition of an absolute duty rate of USD 0.6 per square meter converted to 2mm glass on all kinds of imported float glass for a duration of 4 years; and
(ii) Imposition of an interim import duty rate of 40% on all kinds of imported float glass for 200 days, regardless of the exporting country, pending the investigation by VCAD.
On July 1, 2009, the MOIT announced its decision to initiate an investigation (Decision No. 3329/QD-BCT) and provided notice to the World Trade Organization (WTO) Committee on Safeguards pursuant to Article 12.1(a) on July 31, 2010.
The Vietnamese government found that that increased imports of float glass had caused, and were continuing to cause, serious injury to domestic producers of like products. Information from the petition showed that production capacity decreased from 101 percent in 2007 to 55 percent in 2008, and market share of imported products increased from 3-4 percent in 2007 to approximately 19 percent in 2008. From 2007 to 2008 inventory doubled.
On October 30, 2009, VCAD issued its preliminary report concluding that the increased quantity of imported float glass caused injury to the domestic float glass manufacturing industry. Each interested party was supplied with a copy of the preliminary report and was requested to issue comments or additional arguments, evidence and information no later than November 16, 2009. For more information about the preliminary report, see Mayer Brown’s November 10, 2009, Client Alert “Vietnam Issues Preliminary Report in Country’s First Trade Remedy Case.”
VCAD’s Final Report
As Vietnam’s first trade remedy case, the 49-page final report offers insights into how Vietnam will implement its WTO-based trade remedy laws. The final report includes discussion regarding how VCAD addressed arguments raised by foreign exporters and other respondents, which the preliminary report did not contain.
The final report focuses on the following: (i) whether there is a sudden increase in imports of the goods being investigated in terms of volume, quantity or value; (ii) whether a serious loss is faced by the domestic industry that manufactures similar products or directly competing goods; (iii) the relationship between the increase in imported goods and the serious loss to a domestic manufacturing industry; and (iv) economic factors and other relevant matters.
Based on the information and data supplied by interested parties and the analysis conducted by investigators, VCAD concluded that during the investigation period:
- The domestic manufacturing industry was the main source of supply of the domestic market for the products at issue.
- Domestic manufactured goods were similar to imported goods. Clear and tinted, non-steel core float glass products increased in both absolute and relative terms.
- The domestic industry suffered serious injury, including a decrease in market share and output and sales volume, as well as an increase in inventory, especially during 2008 and the first quarter of 2009.
- The increase in imports was among the causes of the injury to the domestic industry. However, a fluctuating oil price in the domestic market was the main cause for the difficulties facing the domestic industry in 2008 and the first quarter of 2009. In addition, other factors contributed to the injury to the domestic industry, such as a decrease in domestic demand as a result of the global economic crisis and commercial fraud (low-quality float glass sold with labels of high-quality products).
- Currently the domestic float glass manufacturing industry is recovering from its past difficulties and Vietnam’s F.O. oil price has stabilized. Under Decree No. 84/2009/ND-CP, float glass products are now traded under a market mechanism and therefore fluctuate in proportion to world prices.
The final report concluded that, "[t]he application of safeguard measures on the goods under investigation are no longer appropriate.