Third JTC offers chance to sway Vietnam on cars

Third JTC offers chance to sway Vietnam on cars

Commerce Minister Sontirat Sontijirawong is scheduled to attend the third meeting of the Thailand-Vietnam Joint Trade Committee (JTC) next week, hoping to persuade Vietnam to scrap its automobile import measures and aiming to raise bilateral trade to US$20 billion (666 billion baht) in 2020.

According to Mr Sontirat, Vietnam's non-tariff barriers on completely built-up (CBU) cars exported from Thailand are a serious issue, resulting in Thai exporters suspending car shipments.

The meeting will take place Aug 2-3 in Hanoi. On the sidelines of the meeting, business matching will bring together private-sector players from both countries.

The Vietnamese government on Oct 17, 2017, issued Decree No.116, meant to facilitate development of the automotive industry. The decree set out conditions for the manufacture, assembly, import and offer of warranty and maintenance services for cars.

The decree, which came into force in January, states that only companies -- not individuals -- will be considered for automobile import business licences. These companies must also have facilities for automobile warranty and maintenance either under their ownership, under lease or through their authorised dealerships.

Notably, the decree also puts forward stringent requirements for auto importers to obtain documents certifying or documenting that they are authorised to act on behalf of the foreign automobile manufacturers and assemblers to recall imported cars in Vietnam.

This may spell an end to small-scale auto importers in Vietnam, as international carmakers are unlikely to let unofficial dealers conduct recalls.

Another detail within the decree is the tightening of regulations on imports of used cars. Any used cars imported into Vietnam must be registered for circulation in countries with equivalent or more stringent emissions standards than those in Vietnam.

In addition, when conducting inspections for used vehicles with quality management agencies, importers must be able to provide valid circulation registration certificates up to the date of export granted by a competent foreign agency, or papers of equivalent legal validity.

Used cars are required to have a warranty period of at least two years or 50,000 kilometres for small cars, and at least one year or 20,000km for other types of cars.

Such stringent measures are regarded as discriminatory practices, Oramon Sapthaweetham, director-general of the Trade Negotiations Department, said earlier.

Mrs Oramon said she will urge Thai negotiators to rev up settling the issue through all possible avenues, including the World Trade Organization, contending that Vietnam's new decree to curb automotive imports falls afoul of WTO agreements and results in shipment delays and higher expenses for exporters.

Vietnam is Thailand's second-largest trading partner in Asean and fifth largest in the world. Over the past five years, two-way trade between Thailand and Vietnam averaged $13.14 billion, with growth of 9.7% a year.

In 2017, two-way trade between the two countries amounted to $16.64 billion, with key exports including finished oil, fresh, frozen and dried fruits, automobiles and parts, plastic pellets and chemicals.

Key imports from Vietnam were electric appliances, crude oil, electric machines and parts, steel products, and automotive parts.

Mr Sontirat said Thailand and Vietnam are scheduled to discuss bilateral economic partnership, trade facilitation, investment promotion activities, agricultural and intellectual property cooperation, and transport connectivity at the meeting.

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