Importers and traders are said to be flawed in disputing the Tariff Commission’s (TC) recommendation to increase the safeguard measure on imported cement by 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 P12 definitive safeguard duty per bag of imported cement from the P8.40 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.
However, importers contend that the ex-warehouse price of the importers and the 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’ ex-warehouse price versus the exporting countries’ manufacturers’ ex-warehouse price, not the imports’ landed cost,” the group explained.
“This comparison is not 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,” CEMAP said.
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, the group said that the recommendation of the industry to push for at least P18 to P20 definitive safeguard duty for imported cement may be more favorable to 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 P18 to P20 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 P8.40 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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