DTI evaluating safeguard duty on imported cars

The local automotive industry, which is recovering from a slump in sales last year, may face a new challenge as the government is evaluating a petition to impose a safeguard duty on imported cars.

“We are currently evaluating the safeguard duty on auto,” Trade Undersecretary Ceferino Rodolfo told reporters.

This, after the agency received a petition for the application of safeguard measure on imported motor vehicles from the Philippine Metal Workers Alliance.

Registered with the Department of Labor and Employment, the group is a broad alliance of automotive iron and steel, electronics and electrical sectors including affiliates in key automotive industry players.

The group wants the government to impose safeguard measures on motor vehicles as imports have increased from 2014 to 2018.

Data showed Philippine imports of motor cars for transport of people rose to 207,000 units last year from over 153,000 units in 2014.

Of the more than one million cars imported by the Philippines from 2014 to 2018, the bulk, or 428,000 units, came from Thailand, while Indonesia was the second biggest source with 312,000 units, and Korea was on third place with more than 100,000 units.

Increased imports are seen to pose a threat to local car assembly, auto parts manufacturers, as well as employment in the sector as such would lessen opportunities to produce cars in the country and source parts from local suppliers.

Free trade arrangements entered into by the country have made it easier to import cars.

At present, cars imported from Southeast Asian neighbors can enter the country duty-free, while those from Korea are imposed a five percent tariff.

Republic Act 8800 or the Safeguard Measures Act allows the government to provide relief to the local industry when this is seriously injured by a surge in imports.

In the evaluation of the petition, Rodolfo said the technical working group on trade remedies would convene to look at the application of safeguard measure for car imports, and all interested parties would be notified about the preliminary investigation and asked to submit their response.

“It may take three months before the technical working group can come up with a recommendation for the DTI secretary to consider,” he said.

Should the DTI secretary make a preliminary determination to impose safeguard measure, the matter would then be endorsed to the Tariff Commission (TC) which shall conduct its formal investigation.

After the TC’s probe, it would make a recommendation to the DTI which will decide on the matter.

Higher taxes under the government’s tax reform program took a toll on the local automotive industry last year as the Chamber of Automotive Manufacturers of the Philippines Inc.’s sales declined by 16 percent to 357,410 units from the 425,673 units in 2017, while the Association of Vehicle Importers and Distributors Inc.’s sales were down by 17 percent to 88,700 units from 106,285 units in 2017.

Earlier this year, the government decided to impose a definitive safeguard measure on cement for three years to enable local players to become more competitive amid rising imports.