Japan worries about reduction of quotas on steel imports to Thailand

The Thai government rejected Japan's request for an increase in the quota for duty-free steel imports and, even at the risk of angering Tokyo, cut its quota in half.

Japanese steel importers have asked the government to increase the duty-free import quota for three types of stainless steel in 2015 from 1.22 million tonnes this year. However, the government is going to reduce Japan's quota to 530 thousand tons. Out-of-quota Japanese steel imports will be taxed between 5 and 10 percent, depending on the type.

Japanese investors are very upset with the outcome of the negotiations, although the government has promised to revise the quotas in the middle of the year. “Japan has always received high duty-free quotas on steel - even higher than the amount used by Japanese automakers in Thailand, but the quota will be cut by more than half next year from the previous level. The Japanese will look for ways to resist the decision and are not going to wait until mid-2015 to get it reconsidered, ”according to industry experts.

A Japanese steel user said the government should acknowledge the impact on Thailand's auto industry if Japanese automakers cut production here. The quota request was made through the Japanese government a few months ago in line with the expected growth in demand for three types of stainless steel - Q9, Q10 and Q11 - along with improvements in the automotive industry in Thailand.

Four meetings were held between the governments of the two countries. Thailand offered a duty-free quota of 668,000 tons after Japan asked for more than 1.5 million tons. However, after the closing meeting in Tokyo last month, Thailand has cut the quota by 530,000 tons.