Petrochem, plastic firms to present new arguments on tariff issue

The Cabinet-level Tariff and Related Matters (CTRM) Committee has decided to give the Association of Petrochemical Manufacturers of the Philippines (APMP) and the Philippine Plastics Industry Association (PPIA) another opportunity on Tuesday, Oct. 25, to present new material information regarding their respective positions on the petrochemical tariff issue.

Trade and Industry Secretary Peter B. Favila said the APMP has complained that it was not properly informed on how the CTRM had arrived at its earlier decision to reduce the tariff on 11 petrochemical products.

The APMP appealed yesterday to the CTRM to be given a chance to present new material information that would hopefully convince the CTRM to reverse an earlier decision lower the tariff on 11 petrochemical products that are also being manufactured by local petrochemical firms.

But in the same vein, the CTRM will also give equal opportunity to the PPIA to present its case anew to the committee.

However, Favila stressed that in granting APMP the benefit of "due process" the CTRM is not agreeing yet to reverse its earlier decision.

Trade Undersecretary and Board of Investments (BOI) managing head Elmer C. Hernandez, who was also present at the CTRM meeting Thursday night, explained that the decision to give "due process" to APMP is because this is the first time that an appeal has been made against a CTRM decision.

Thus, to ensure that such a incident would not recur in the future, the CTRM is tightening up on the process of evaluation and would ensure that the CTRM secretariat adequately informs and explains any CTRM decision to petitioners.

The APMP has recently appealed not to use the midstream petrochemical industry as a "guinea pig" in complying with government’s commitments under the ASEAN Free Trade Agreement.

In a press statement, the APMP reiterated its stand that the midstream petrochemical industry needs continuing tariff support and "should not be made the legal and diplomatic ‘guinea pig’ in the ASEAN."

The APMP insisted that "there is no clear mechanism for temporarily including it in the Inclusion List, then subsequently taking it out again from said list."

The APMP also disputed government’s need to compensate other ASEAN countries if it extends the tariff cover on petrochemical products.

The APMP cited the fact that in the World Trade Organization, "the matter of compensation is not determined unilaterally by the complaining party but must be proven as fact, with all the economic data presented fully through concrete financial data by the complaining party."

Furthermore, the APMP said "they must not be speculative damages, but real, which the other party has every right to contest and the need for and amount of compensation subject to arbitration."

Aside from the ASEAN arguments, the APMP also argued that "the revenues foregone by reducing tariffs from three percent to zero on certain items should be weighed against the much greater revenue loss from reducing tariffs on resins from 10 percent to 15 percent.

The CTRM had recommended an Executive Order on the CEPT rate reduction on plastic and petrochemical resins.

The new EO would supersede EO 161, issued by Malacanang in 2003, which suspended the implementation of the tariff reduction schedule for petrochemical products adopted by members of ASEAN under the ASEAN Free Trade Agreement (AFTA).

The new EO would lower the tariffs of at least nine petrochemical categories excluded from the AFTA scheme.