Ce­ment im­porters flawed in as­sail­ing safe­guard mea­sure

Sun Star Bacolod - - Business -

IM­PORTERS and traders are said to be flawed in dis­put­ing the Tar­iff Com­mis­sion’s (TC) rec­om­men­da­tion to in­crease the safe­guard mea­sure on im­ported ce­ment stat­ing that the ba­sis of the com­pu­ta­tion is wrong, ac­cord­ing to the Ce­ment Man­u­fac­tur­ers As­so­ci­a­tion of the Philip­pines (CEMAP).

Last week, the TC rec­om­mended a PHP12 de­fin­i­tive safe­guard duty per bag of im­ported ce­ment from the PHP8.40 pro­vi­sional safe­guard duty per bag im­posed by the Depart­ment of Trade In­dus­try (DTI) in Fe­bru­ary to counter the im­mi­nent threat of se­ri­ous in­jury of such im­ports to the do­mes­tic in­dus­try.

The TC based its com­pu­ta­tion on the dif­fer­ence of the weighted av­er­age landed cost of im­ported ce­ment and the av­er­age do­mes­tic ex-plant sell­ing price of lo­cal man­u­fac­tur­ers. Im­porters, how­ever, con­tended that the ex-ware­house price of the im­porters and ex-plant price of lo­cal in­te­grated ce­ment man­u­fac­tur­ers should have been the ba­sis of the com­pu­ta­tion.

“The proper com­par­i­son in de­ter­min­ing the amount of safe­guard duty should be the price be­tween the do­mes­tic in­dus­tries’ exware­house price ver­sus the ex­port­ing coun­tries’ man­u­fac­tur­ers’ ex-ware­house price, not the im­ports’ landed cost,” the group said.

This com­par­i­son, CEMAP said, is an ap­ple to ap­ple com­par­i­son.

“The ex-ware­house price of the do­mes­tic in­dus­try and the landed cost of the im­ports are not of the same level of trade. The threat to the do­mes­tic in­dus­try are not the im­porters but the man­u­fac­tur­ers of these im­ports,” it added.

CEMAP also in­sin­u­ated that some­thing fishy has been go­ing on with re­gard to the costs showed by ce­ment traders to the TC.

“Traders are com­plain­ing they have other costs but they have not opened their books to show their true cost to the TC. Are they hid­ing some­thing? Are they pay­ing the cor­rect taxes?” CEMAP said.

“(They) have not filed any af­fi­davit and have just re­sorted to rhetoric or anec­dotes. In fact, TC has asked them to file an af­fi­davit but they never did which is quite odd,” the group added.

Should this be the case, then the rec­om­men­da­tion of the in­dus­try to push for at least P18 to P20 de­fin­i­tive safe­guard duty for im­ported ce­ment may be more fa­vor­able to curb avert the surge in im­ports that have al­ready been ap­par­ent in the re­cent months.

Ac­cord­ing to CEMAP, the do­mes­tic in­dus­try has to be able to ad­just to com­pete against the ex­port­ing coun­tries’ man­u­fac­tur­ers, not the im­porters who are the ex­porters’ dis­trib­u­tors and cus­tomers.

The group also blasted the claim of im­porters and traders that the safe­guard duty on im­ported ce­ment will in­crease the cost of hous­ing.

“Ce­ment rep­re­sents only 5% of hous­ing cost and that the ef­fect of the safe­guard duty on prices, if any, shall not be vis­i­ble. P12 per bag rep­re­sents 5% of the ce­ment price or 0.25% of hous­ing cost,” CEMAP said.

DTI Sec­re­tary Ra­mon Lopez is eval­u­at­ing the rec­om­men­da­tion of the TC and has the op­tion to in­crease or lower the sug­gested safe­guard duty.

The in­dus­try is push­ing for at least PHP18 to PHP20 de­fin­i­tive safe­guard duty for im­ported ce­ment in view of the un­abated surge in im­ports of the con­struc­tion com­mod­ity in the first se­mes­ter of this year de­spite the PHP8.40 pro­vi­sional safe­guard duty in ef­fect since Fe­bru­ary.

The vol­ume of ce­ment im­ports in­creased by 64 per­cent in the first quar­ter of 2019 to 1.77 mil­lion met­ric tons (MT) from 1.06 mil­lion MT in the first quar­ter of 2018. Trade fig­ures also showed that ce­ment im­ports in the first half of this year in­creased by an alarm­ing 48.2 per­cent to 3.4 mil­lion MT from 2.29 mil­lion MT in the same pe­riod last year.

Im­ports have been in­creas­ing since 2013 which stood at only 3,558 MT. By 2018, the to­tal vol­ume of ce­ment im­ports was nearly 5 mil­lion MT. The surge in ce­ment im­ports started in 2016 caus­ing ce­ment man­u­fac­tur­ers’ earn­ings to fall sharply by 49 per­cent in 2017 and ag­gre­gate net in­come to slid by 29 per­cent in 2017 and 78 per­cent in 2018, the DTI found.

With the im­mi­nent threat of se­ri­ous in­jury to the do­mes­tic in­dus­try, the Trade Sec­re­tary took the bold and un­prece­dented move of ini­ti­at­ing the safe­guard mea­sure as pro­vided un­der the Safe­guard Mea­sure Act. The TC sub­se­quently con­firmed and held a pub­lic hear­ing on the pe­ti­tion of CEMAP to make the DTI’S pro­vi­sional safe­guard duty higher and per­ma­nent.

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