Higher safeguard measure counters threat to cement industry
While the increased safeguard measure of P12 per bag of imported cement may protect local manufacturers of the product from serious injury due to increasing cement imports, industry observers suggested a higher safeguard duty ranging from P18 to P20 per bag should be considered as a progressive tariff for the commodity.
This developed as trade figures showed that cement imports in the first half of this year increased by an alarming 48.2 percent to 3.4 million metric tons (MT) from 2.29 million MT in the same period last year.
The higher safeguard measure of P12 per bag of imported cement may protect local manufacturers of the product from serious injury posed by the surging importation of the commodity, according to the Tariff Commission (TC), but many are saying the tariff is not enough. The P12 safeguard duty is the difference between the weighted average landed cost of imported cement and the average domestic ex-plant selling price of the local cement industry for the most recent year of the period of investigation in 2018.
Recent data also showed that the volume of cement imports even increased by 64 percent in the first quarter of 2019 despite the P8.40 duty imposed since 9 February. Department of Trade and Industry (DTI) monitored 1.77 million MT of imported cement brought into the country from January to March 2019, compared to 1.06 million MT in the first quarter of 2018.
“The Commission finds the existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future,” the TC said in its final report on the imposition of safeguard measure against importations of cement released on 9 August 2019.
In that decision, the TC recommended to adjust the P8.40 provisional safeguard duty per bag of imported cement imposed by the DTI starting
February for a period of three years.
The Commission finds the existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future.
“Since it addresses the extent of price undercutting by cement imports based on the latest available data, the Commission believes that this level of safeguard may prevent the occurrence of serious injury to the domestic cement industry and will facilitate the industry’s adjustment to the adverse effects of increasing cement imports,” the Commission report explained.
The counsel of the domestic industry represented by the Cement Manufacturers Association of the Philippines, the petitioner for a higher and permanent safeguard measure on imported cement, lauded the TC’s decision for being based on facts and evidence.
“What they (TC) did is based on case merits and is highly courageous,” said Jose Salvador Rivera Jr.
DTI Secretary Ramon Lopez also welcomed the TC’s findings.
“That little duty adds some revenues to the Department of Finance, to the government,” Lopez said. “But I think the more important thing is, at least, there’s a level playing field with the local manufacturers.”
When investors come to a country and that country allows other nations to flood it with cheap and substandard commodities like cement, that’s already “unfair competition,” Lopez said.
He pointed out that a balance must be struck between quality and right pricing so local manufacturers can compete and investors would be enticed to come in.