Cars face barriers in Vietnam

Cars face barriers in Vietnam

Cars are lined up for loading onto cargo ships at Laem Chabang Port in Chon Buri province. (Photo by Patipat Janthong)
Cars are lined up for loading onto cargo ships at Laem Chabang Port in Chon Buri province. (Photo by Patipat Janthong)

Car exports to Vietnam can expect to face non-tariff barriers after the country, the biggest importer within Asean of pickups and passenger cars from Thailand, prepares to enforce the new Euro 5 emission standard from Jan 1 next year.

Manufacturers that cannot adjust to the stricter environmental standard stand to lose sales.

The automotive club of the Federation of Thai Industries (FTI) is surveying automakers about how they will respond to the new trade rule.

"We are worried car exports will be affected, but we cannot predict the scale now," said Surapong Paisitpatanapong, vice-chairman and spokesman for the FTI's automotive club.

He expects to receive replies from manufacturers soon, allowing the club to assess the situation.

"We are aware the [Euro 5] measure is used by countries that need to protect their domestic industries," said Mr Surapong.

Pisit Rangsaritwutikul, president of the Thailand Automotive Institute (TAI), said the impact would not be serious because he believes the Thai and Vietnamese governments can negotiate to find a solution.

The Thai Industrial Standard Institute said the Euro 5 standard will be raised by Thai officials during a meeting of the World Trade Organization's Technical Barriers to Trade Committee in Geneva in November this year.

Mr Pisit said car exports to Vietnam are considered relatively low, compared with sales volumes in other overseas markets.

A recent talk between TAI and some car manufacturers found they are ready to produce cars that can even meet the Euro 6 emission standard, which is currently in use in European countries, he said.

One problem is local oil refineries that make Euro 4 fuel are still adjusting their output to produce Euro 5 fuel, said Mr Pisit.

"It may take 5-6 years to see 100% of oil refineries produce Euro 5 fuel," he said, adding a transition toward the cleaner fuel started in 2018.

Last year, the National Environment Board announced Thailand plans to enforce Euro 5 fuel standard from Jan 1, 2024.

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