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Local petrochemical producers have opposed moves by finished plastic products manufacturers to further extract the tariff lines and impose a zero duty from 10 percent on their raw material input stressing this will open avenues for technical smuggling to the detriment of the developing domestic petrochemical industry and government revenues.

In a counter petition submitted to the Tariff Commission, the Association of Petrochemical Manufacturers of the Philippines (APMP) enumerated various reasons for their opposition to the request of the Philippine Plastics Industry Association (PPIA) for the extraction of tariff lines for low density polyethylene (LDPE) under AHTN 2017 39.01, and the reduction of the MFN (most favored nation) tariff rate from 10 percent to zero percent.

“If enacted, it will again provide a tempting loophole for some importers to request Tariff Commission rulings so as to be categorized under these tariff lines, or even for some to outright misdeclare their goods, to enjoy zero duties,” stated the APMP position paper submitted to Tariff Commission Chairman Marilou P. Mendoza and signed by its chairman Patrick Henry Go and president Concepcion I. Tanglao.

LDPE is used to make many thin, flexible products from plastic bags shrink-wrap and stretch film for food and medicines as well as coatings for paper cartons for liquids and disposable beverage cups. Manufacturers also use LDPE to create thin container lids, squeezable bottles and some toys.

PPIA told the Tariff Commission that the imposition of zero duty from 10 percent on LDPE, the raw material used in the production of plastic packaging materials and which is not locally produced, will reduce their cost and make them stay competitive.

APMP countered that further extraction for LDPE under AHTN 3901 will further complicate the already complicated multiple tariff lines for the many types of PE resins with specific gravities less than 0.94.

In fact, the association pointed out that despite the previous extraction of Linear Low Density Polyethylene (LLDPE)" resin, which has a specific gravity of less than 0.94 and so falls under AHTN 3901.10, many importers still chose to use 3901.90.90, defined as "- - Other," as their tariff line when importing LLDPE, because 3901.90.90 had the lowest tariff duty for PE at 3 percent versus the 10 percent specified for LLDPE under 3901.10.12 and 3901.10.92.

The same is true with the extraction of “ethylene-alpha-olefin copolymers," which is a more direct description of their resins rather than 3901.90.90's but importers still chose "- - Other" because it is easier to justify even with just documentary evidence.

APMP claimed that they were not even consulted when the previous tariff extractions for LDPPE resins and the lowering to 3 percent MFN tariff were made.

With very small difference in resin gravities under various tariff lines, APMP warned the situation to become an avenue for “misdeclarations and/ or reclassifications to those headings.”

With this current petition for LDPE to be given a 0 percent duty, even lower than 3 percent, APMP foresees the same pattern arising. The said petition requests to provide two tariff lines with 0 percent duty for MFN under AHTN 3901, both of which are defined as “- - Other”.