The Japanese Chamber of Commerce (JCC) is urging the Thai government to raise its steel import quota as listed in the Japan-Thailand Economic Partnership Agreement (JTEPA), as the chamber claims the quota keeps falling.
The agreement calls for Thailand to collaborate with Japan in setting its import quota for three types of hot-rolled steel — Q9, Q10 and Q11. The JCC suggested 1.5 million tonnes this year, but the Thai government issued a quota of only 530,000 tonnes.
"The import quota was quite short of what we proposed and we are wondering why, as there was no explanation," said Masaki Katsuta, chairman of JCC's metal division.
The duty-free import quota is for Japanese steel used in the car industry, as Thailand cannot produce these three steel types by itself.
Mr Katsuta said he was concerned the Thai auto sector would be affected if the supply of hot-rolled steel fell short of demand, since the quota decreased this year.
Japan proposed an import quota of 367,700 tonnes and 443,000 tonnes for two types of hot-rolled steel in 2014, but Thailand issued a quota of only 354,700 tonnes and 375,000 tonnes for the two types.
"We think it could reduce the competitiveness of Thai industries. We raised this concern with the Thai government, but there was no response," he said.
The biggest concern for the JCC was a sharp fall in the import quota of Q9 hot-rolled steel, which is widely used for automobiles and auto parts. This quota was set at 210,000 tonnes, far below the JCC proposal of 711,500 tonnes.
Mr Katsuta said the Office of Industrial Economics (OIE) told the JCC the lower quota was in line with falling demand, and that if demand rose sharply Thai steel importers could refund an import duty of around 5% later under Section 19 of the Customs Act.
The JCC countered, saying Section 19 is complicated and impractical.
“We asked the OIE to review the Section 19 system or raise the quota, whichever is easier to increase Q9 imports,” said Mr Katsuta.
The OIE attributed the drop in the steel import quota to a lack of technology transfer, which Japan promised in the JTEPA but has not delivered.
"The goal of JTEPA is to help improve the Thai steel industry, but it seems like this goal has not been achieved yet because we have not communicated on meeting both sides' priorities," said Udom Wongviwatchai, the OIE director-general, referring to the quota and the expected technology transfer process.