DTI, TC differ over cement safeguard duty

There appears to be confusion in the imposition of the second year safeguard duty on imported cement with the Department of Trade and Industry (DTI), the Tariff Commission (TC), and the Bureau of Customs (BOC) apparently not coordinating with each other.

This transpired at the recent public hearing last Friday by the TC on the Monitoring of the Philippine Cement Industry.

The DTI already issued Department Administrative Order No. 20-08 series of 2020 setting the duty rate for the second year of the three-year safeguard measure against imported cement at P9.80 duty for every 40-kg bag of imported cement or P245 per metric ton.

The DTI’s second year safeguard duty was higher than what was originally scheduled and approved rate of P9 for the second year. The first year safeguard duty was P10 per 40 kg bag. The safeguard measure was imposed last year to stop cement import surges as it was determined to be a serious threat to the domestic industry.

But TC Commissioner Ernesto L. Albano said he was not aware of the DTI order, although TC Commissioner Chairman Marilou P. Mendoza acknowledged the existence of the DTI order. Cement importers also claimed that the BOC is already collecting the new duty rate and they are now paying the new rate. Nonetheless, TC will note that BOC has not yet issued a Memorandum Order to effect the earlier approved lower definitive safeguard duty.

According to sources privy to the public hearing, Albano noted of the schedule of the definitive safeguard and stressed that by law the rate should be going down. He said that DTI cannot raise the duty higher (P9.80 per 40 kilogram bag) from the earlier approved rate (P9.00).

“The DTI cannot do that, the schedule has been set that’s the whole point because the industry should improve so the duty should go down,” Albano said. During the three year implementation period, cement companies are expected to make adjustments and be able to compete against imports once the safeguard measure expires.

At the virtual public hearing, executives from various domestic cement firms cited the need for safeguard duty to support their adjustment and expansion programs, which are in various stages of implementation although some of these projects have been delayed due to the pandemic.

An official from the importers’ side, however, noted the cement firms’ projects are mostly operational in nature and not really strategic, meaning not capacity expansion, but which cement companies have to implement with or without the safeguard duty.

Cement firm representatives maintained they need the duty protection for their projects. For instance, CEMEX said that it is difficult to complete their projects without the safeguard measure.

HOLCIM also said that whether their projects are operational or strategic, these are all part of the company’s adjustment programs and investments are ongoing.

REPUBLIC said they have completed investments in 2 cement mills, which the company called strategic because this would increase their clinker output and reduce dependence on imports.

The company stressed that cement operation is capital intensive and that the safeguard measure will certainly help improve confidence of their shareholders to invest in their projects.