Vietnam wins steel dispute with Indonesia

Vietnam has won a three-year dispute with Indonesia regarding safeguards on certain iron and steel products. -Photo www.trav.gov.vn

The World Trade Organisation (WTO) late last week announced the agreement of Vietnam, Taiwan, Penghu, Kinmen and Matsu, on the one hand, and Indonesia, on the other, that a Indonesia would have to implement the recommendations and rulings of the Dispute Settlement Body (DSB) regarding safeguards on certain iron and steel products by March 27, 2019.

This means Indonesia will have seven months from the date of adoption of DSB’s recommendations and rulings.

On August 27, 2018, the DSB adopted the Appellate Body report which found the duties applied by Indonesia on imports of galvalume were not a safeguard measure subject to WTO safeguard disciplines.

The report also found that Indonesia’s specific duty on imports of galvalume was inconsistent with Article I:1 of the General Agreement on Tariffs and Trade (GATT) 1994.

On October 11, 2018, Indonesia informed the DSB that it required a reasonable period of time to comply with the DSB’s recommendations and rulings because it was impracticable for Indonesia to do so immediately.

The dispute was initiated on June 1, 2015 when Vietnam requested consultations with Indonesia regarding a safeguard measure on imports of certain flat-rolled iron and steel products from July 22, 2014.

The safeguard measure consisted a specific duty applied from July 2014 and reduced from Rp 4,998, 784 (US$345) per tonne to Rp 3,629,538 per tonne.

With the DSB’s ruling, Indonesia must stop the application of specific duties as a safeguard measure on flat-rolled iron products and non-alloy steel from Vietnam.

According to the Trade Remedies Authority of Vietnam, more than 60 per cent of Indonesia’s flat-rolled iron products and non-alloy steel came from Vietnam.

Iron and steel are major export products from Vietnam to Indonesia. Customs statistics showed that Vietnam exported 612,700 tonnes to Indonesia in 2017 at an average price of $731.3 per tonne.

The authority said the decision was important to Vietnamese firms becaus eit would help them cope with trade defense mechanisms applied by importing countries.