Temporary safeguard duties on auto imports

MANILA, Philippines — The Department of Trade and Industry (DTI) is imposing provisional safeguard duties on vehicle imports following its evaluation of a petition filed by a workers’ group.

Trade Secretary Ramon Lopez, in a Viber message to reporters yesterday, said the DTI decided to  impose provisional safeguard duties in the form of a cash bond amounting to P70,000 per unit for imported passenger cars (PC) and P110,000 per unit of imported light commercial vehicles (LCV).

The provisional safeguard duties will be in place for 200 days from the issuance of an order by the commissioner of Customs and while the case is under formal investigation by the Tariff Commission (TC).

DTI’s decision was made as it found a substantial cause of serious injury to the domestic motor vehicle manufacturing industry.

It said a delay in the imposition of a safeguard measure would cause damage to the industry which would be difficult to repair.

“The Philippines has one of the most open markets relative to our ASEAN neighbors. While we generally do not restrict products coming into the market, we also need to ensure the level playing field for our local industry,” Lopez said.

Based on DTI’s findings, imports of PCs rose by an average of 35 percent during the period of investigation (POI) from 2014 to 2018, while the share of imports relative to production showed that imports exceeded domestic production from 295 percent in 2014 to 349 percent in 2018.

Imports of LCVs, which include pick-up trucks jumped from 17,273 units in 2014 to 51,969 units in 2018.

LCVs’ share of imports relative to domestic production also significantly increased from 645 percent in 2015 to 1,364 percent in 2018.

The decision to impose a provisional safeguard measure was made based on the DTI’s preliminary investigation on the petition received from the Philippine Metalworkers’ Alliance (PMA) in 2019 to put in place a safeguard measure on imported automobiles.

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

The group filed the petition as it claimed the increase in vehicle imports reduced opportunities of workers in local assembly plants to manufacture cars.

Under Republic Act 8800 or the Safeguard Measures Act, the country may impose a safeguard measure or higher tariff on imports to provide temporary relief to domestic players producing like or competitive products, that are threatened and hurt by increased imports.

“The provisional safeguard measures will provide a breathing space to the domestic industry which has been facing a surge in importation of competing brands. To clarify, importation is not being banned and consumers will still have the option to choose, but imported vehicle models covered by the rule shall have safeguard import duties,” Lopez said.

He said the measure is expected to help facilitate the structural adjustment of the local industry to be more cost efficient and technologically advanced.

While a provisional safeguard measure is being imposed on imported vehicles, the case would be endorsed to the TC which will then conduct a public hearing to determine if there should be a definitive duty to be put in place on automobile imports.

After the public hearing, the TC would submit its recommendations to the DTI Secretary.

“It’s basically a welcome development because it would hopefully help in preservation of jobs,” PMA secretary general Rey Rasing said yesterday.

For his part, Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) president Rommel Gutierrez said he would need to see the order or report from the DTI first.

Earlier, he said the imposition of a safeguard measure on vehicle imports would limit the industry’s ability to navigate the crisis which has affected demand and sales.

As of end-November last year, total vehicle sales of the CAMPI and Truck Manufacturers Association Inc. dropped 42 percent to 196,197 units from 336,226 units in the same period in 2019

Meanwhile, sales of the Association of Vehicle Importers and Distributors Inc. fell 43 percent to 40,993 units as of end-October from 71,362 units in the same period in 2019.