WTO gives Decision in Favour of Vietnam in a Steel Dispute with Indonesia

According to Trade Remedies Authority of Vietnam, the country had won three-year dispute (started on 1 Jun’15) with Indonesia regarding safeguards imposed on imports of galvalume products. The safeguard measure consisted a specific duty applied from July 2014 on Vietnamese flat-rolled (galvalume) products coming to Indonesia from Vietnam, that were reduced from Rp 4,998,784 (USD 345) per tonne to Rp 3,629,538 per tonne (USD 250) per tonne in the time span of three years.

Last week, WTO announced its decision that Indonesia would have to implement the recommendations and rulings of the Dispute Settlement Body (DSB) regarding safeguards on Vietnamese galvalume exports to Indonesia by March 27, 2019, which means that the country has only seven months for the adoption of DSB’s ruling and recommendations.

In addition to this, it was also found by the Appellate Body report (that was adopted by DSB) that the duties applied by Indonesia on imports of galvalume were not a safeguard measure subject to WTO safeguard disciplines. As per the report, Indonesia’s specific duty on imports of galvalume was inconsistent with Article I:1 of the General Agreement on Tariffs and Trade (GATT) 1994.

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. However, On 11 Oct’18, 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.

Vietnam’s Trade Remedies Authority is of the opinion that this decision in favor of Vietnam was very important as this would help them cope up with trade defence measures applied by various importing countries on Vietnam.

Iron and steel are major export products from Vietnam to Indonesia. According to Customs data, Vietnam exported 612,700 tonnes of steel and iron products to Indonesia in 2017 at an average price of USD 731.3 per tonne. Indonesia’s more than 60% of flat-rolled iron products and non-alloy steel came from Vietnam.