Japan, Thailand Discuss Steel Trade Issues

Japanese and Thai steel interests agreed to improve Thai operation of export tax exemption on imported steel for reexport in automobile and other products from Thailand at the 8th steel dialogue in Tokyo on Wednesday. Japanese delegation proposed for Thailand to expand tax exemption volume for 2011 under Japan-Thailand Economic Partnership Agreement (EPA) when Japanese manufacturers’ transplants in Thailand increase steel consumption. Thailand tries to improve the tax exemption procedure as early as in November.

Japanese delegation includes METI’s officials and executives of Nippon Steel and JFE Steel. Thai delegation includes officials of Ministry of Industry and executives of steel makers.

Thailand allows tax exemption for 440,000 tonnes of pickling steel, 191,500 tonnes of interstitial free steel for rolling and 257,000 tonnes of reroll material steel for automobile in 2010. Japanese requested 1.35 million tonnes of tax exemption for 2011 including 828,000 tonnes for pickling steel, 221,000 tonnes for IF steel and 301,000 tonnes for rerolling material steel when Thai automobile production keeps record level mainly for Japanese transplants and the production is expected to increase more in 2011.

Thailand offered 1.001 million tonnes of tax exemption for 2011. The government tries to secure the room for domestic steel makers. However, Japanese emphasized Japanese buyers import high valued steel products even with tax payment and the products don’t compete with Thai makers’ products line.

Japanese also argued tax exemption benefits Thai economy when around half of automobile made in Thailand are exported. The tax exemption system, however, doesn’t work now due to the bureaucratic procedure. Japanese seeks Thailand to simplify the procedure.

METI also seeks Thailand to ease local rule to oblige Thai standard for steel products sold in Thailand citing effort by Philippines and other countries. Thailand shows positive sign to improve the rule.