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December 30, 2009

Users slam demand for protective import tariff on float glass

Filed under: Uncategorized — ktetaichinh @ 3:20 am
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A demand by float glass producers to slap protective tariffs has come under fire from industries who use the glass as feedstock for their production.

They said the measure, the first of its kind since Vietnam joined the World Trade Organization in 2006, would impact their businesses since there are only two float-glass producers in the country.

Float glass is made by floating molten glass on a bed of molten metal, typically tin, and is used mainly in the automobile, construction, and civil engineering industries.

The Ministry of Industry and Trade initiated an investigation in July into float glass imported from Indonesia, China, Thailand, the Philippines, Japan, Taiwan, Singapore, Malaysia, Korea, India, Belgium, the US, Hong Kong, Switzerland and Australia.

The investigation followed allegations of dumping and trade fraud, including the false declaration of product categories, by two petitioners and a demand to protect local producers by imposing an absolute tax of US$0.6 per square meters on all kinds of importedfloat glass for a period of four years.

The petitioners were Viglacera Float Glass Company and Vietnam Float Glass, a joint venture between two Japanese partners and Viglacera.

The petitioners also said the sharp increase in float-glass imports, together with a large volume of smuggled glass, caused local producers to decrease output by half, their inventories were still at 30 percent of annual output.

They shattered large volumes of finished products and returned them to the furnace to lower inventory but this raised production costs, they said.

But importers and users dismiss their arguments. Luong Trong Tuan, director of Phu Phong Corporation, said the losses were not only due to the competition fromimports but also due to the companies’ poor management and investment strategies.

Float glass supplied by local producers is poor in terms of design and product range while international suppliers offered high-quality products at 30-40 percent lower prices, especially during the economic slump, he said.

It is unreasonable to state that imports are affecting Vietnamese producers who have a market share of more than 80 percent, he added.

Some 20 companies use domestically made and imported float glass to produce specialized glass for the automobile, construction, and civil engineering industries.

Nguyen Thi Thuy Dung of Sunglass Safety Glass Industries said local firms would face difficulties in processing float glass applied with the safeguard measure as their products were too expensive to compete with finished glass imported.

If the flat tax is slapped, the 20 firms might have to close their factories or turn into trading companies, she warned.

They had each installed processing machinery costing US$600,000-700,000 in the last two years and employ thousands of workers, the Vietnam Glass Association said.

Ngo Quang Thuy, managing partner of law firm NT Trade law, which represents Phu Phong Corp., said the measure would only hurt consumers since prices are high andthe glass industry could again revert to the monopoly status that ended in 2006, she said.

Hearing

The ministry’s Vietnam Competition Authority held a hearing attended by both sides and glass producers from Thailand, Indonesia, and Europe last month.

The foreign producers and Vietnamese importers said the protective tax would not benefit Vietnam’s float glass industry or improve the competitiveness of Vietnamese producers. The authority will announce its final decision next year.

Under WTO rules, Vietnam has to reduce import tax on another product if it imposes safeguards on any product imported from WTO members.

The association said the measure should be carefully considered since it is unfair on other industries to face tougher competition just to ensure the float-glass industry is protected.

According to a report by the Vietnam Competition Authority, imports of float glass surged by 245.3 percent in 2008 to 33,765 tons, from 9,779 tons in 2007. The imports reached 16,696 tons in the first three months of this year.

Reported by Minh Quang

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