Japanese steel threatens Thai mills
The government of
Thailand faces a quandary about whether or not to include hot rolled steel trade in the free trade agreement between it and
Japan.
Thai steelmakers are adamantly opposed to liberalizing the country's trade because they fear that they will not be able to compete with their Japanese counterparts. Freeing up the trade between the two countries would cause the Thai steel industry to collapse, argue Thai steel producers.
On the other hand, downstream industries such as appliance and machinery manufacturers are eager for the proposed liberalization. Inclusion of hot rolled steel in the free trade agreement would translate into cheaper and higher quality steel products for the manufacturers.
Thailand and
Japan completed their seventh round of free trade talks last week. In the discussions,
Thailand proposed maintaining a 5% tariff on Japanese hot-rolled steel for the first 10 years of the agreement, with the aim to lift the tariff entirely within 15 years. Japanese officials objected, demanding an immediate cancellation of all steel tariffs.
Thailand's domestic demand is likely to rise 7% per year over the next five years, reaching 20 million metric tons in 2010. The Asian country, which is the 10th largest steel importer in the world, recorded a 17.6% year-on-year increase in steel imports in 2004 to hit 10 million metric tons.