Vietnam’s planned coal export tax hike in order to slash outbound shipment and save the reserve for domestic consumption will violate common rules of GATT/WTO relating to the production, exports and domestic consumption of a certain product when the country joins the global trade body, local media has warned.
Recently, the two ministries of Planning and Investment, and Natural Resources and Environment have proposed raising export and natural resource taxes on coal to 5-10 per cent from the current 0 per cent to reduce the export volume and ensure sufficient supply for thermo-power plants in the country. However, the proposal is unsuitable while Vietnam is nearing the WTO membership.
Under the GATT/WTO common rules, export limit is only carried out (by quota or export tax) in some cases relating to “the preservation of non-recyclable natural resources” (the article XX (g) of GATT). In other words, Vietnam can only use the measure to limit fossil coal exports (with reasons, for example, to protect the environment and preserve coal sources prior to risks of becoming exhausted rapidly due to over-exploitation) only if Vietnam also limits coal exploitation for domestic consumption.
Thus, the move in which Vietnam plans to reduce coal exploitation for exports by raising export and natural resource taxes while it has no measures to limit domestic consumption obviously violates the above rules of GATT/WTO. The tax hike, therefore, will be surely removed when the country joins the WTO.
Besides, the aim of limiting coal exports in order to serve domestic thermo-power plants is also a measure which will be banned to be applied when Vietnam becomes a member of the WTO because it violates the common agreement on subsidy and anti-dumping measures (GASCM) relating to the abolishment of two-price system (domestic price and international price) aiming to benefit some certain industries rather than the entire domestic economic sectors.
Using export and resource taxes will make coal prices in the domestic market lower than that in the world market. However, the creation of the two-price system does not break the rule of subsidy of GASCM when all domestic industries enjoy coal prices lower than world prices.
But if exploited coal volume is sold to Vietnam’s thermo-power plants with priority, the imposition of export and resources taxes on coal is obviously seen as a subsidy measure, leading to the anti-dumping of related exports which is banned by the WTO.
With this action, Vietnam will be faced a return blow by its trade partners by applying anti-dumping tariffs on other Vietnamese exports if they see their interests are affected from the price-subsidy.
Vietnam now expect to get the WTO ticket in October.
VietNamNet
Vietnamese
