Auto, motorcycle, plastic makers nix tariff action vs Thailand

MANILA, Philippines — Vehicle assemblers, motorcycle manufacturers and the local plastics industry oppose the government’s plan to suspend preferential tariffs on imports from Thailand as a retaliatory measure for the latter’s non-compliance with a World Trade Organization (WTO) ruling on a cigarette case, saying the move would hurt even domestic firms and consumers.

Speaking at a public hearing yesterday for the proposed list of products for the suspension of concessions, Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) president Rommel Gutierrez said the group strongly opposes the inclusion of 32 motor vehicle tariff lines in the list of products for retaliation against Thailand.

“CBU or the completely built-up units from Thailand play a critical role in the automotive market mix. The imposition of additional duty whether in the form of safeguard or retaliatory measure will drastically increase the prices of vehicles offered to the market,” he said.

He said the move is inefficient and counterproductive both at the domestic and regional level.

At the domestic level, he said the artificial increase in prices as a result of increased tariff or change in source of the product would have negative effects to consumers of finished goods such as CBU and replacement parts, as well as on manufacturers, assemblers and parts producers that import raw materials and production inputs from Thailand.

At the regional level, he said disruption in the production and supply network could potentially harm all automotive product bases in Southeast Asia including the Philippines.

“In view of the foregoing, CAMPI urges the Philippine government to pursue a positive solution to the dispute. At the sectoral level, the relative impact to Philippine automotive (industry) may seem small given the size of Thailand’s industry. However, the absolute impact to the local industry will be very detrimental to our recovery efforts,” he said.

The local automotive industry is already facing challenges given the recent announcement of the Department of Trade and Industry (DTI) of the imposition of provisional safeguard measures amounting to P70,000 for every imported passenger car and P110,000 for every imported light commercial vehicle as it found higher imports are hurting local manufacturing workers.

The Thai Automotive Industry Association said the Philippines’ recent announcement relating both to provisional safeguard measures and looming trade retaliatory action coming in successive waves of less than two weeks apart from each other, have impaired business outlooks and investment climate, causing serious concerns and creating business uncertainties among affected industry members and beyond.

Motorcycle Development Program Participants Association secretary general Vicelyn Layno said the group is also opposed to the inclusion of motorcycle parts and components in the proposed suspension of concessions.

“This may affect the after-sales cost which is detrimental to our consumers who belong to classes C and D who are also very sensitive to costs or prices. Likewise, this will make original parts more expensive thus, making it more non-competitive to counterfeit products, thus, brings also the issue of safety,” she said.

For his part, Philippine Plastics Industry Association president Danny Ngo said the group is against the inclusion of polyethylene in the list of products for retaliatory tariffs.

“The material would increase cost for local production and make domestic products more expensive and less competitive. As a result, it would also serve as severe disruption as the consumer shifts consumption to imported products, therefore, risking thousands of Philippine jobs,” he said.

He said the retaliatory tariff on polyethylene would create a problem in sourcing materials as Thailand currently serves as a major source for the Philippines.

Kanitha Kungsawanich of Thailand’s Department of Trade Negotiations said in the same event the Thai government considers the Philippines’ move to retaliate and cover a wide range of products not related to the WTO dispute as unjust.

“We request the Philippines to terminate without delay any actions that would lead to retaliation against Thailand including this public hearing process,” she said.

Angelo Salvador Benedictos, assistant director for Bureau of International Trade Relations at the DTI, said the agency is seeking authorization from the WTO Dispute Settlement Body (DSB)  to proceed with the suspension of concessions as Thailand has not implemented the decision.

In 2008, the Philippine government filed a case on behalf of Philip Morris Philippines against Thailand for the imposition of higher duties on cigarettes made from the Philippines.

Philip Morris Philippines was exporting 30 percent of its output from its Batangas plant to Thailand per year and the latter’s move to discriminate cigarette exports from the Philippines was seen to favor

state-owned Thai Tobacco Monopoly which accounted for 80 percent of the Thai market at that time.

“The issue has been brewing since 2008. It is already 2021 and we have not found any solution despite the fact the Philippines won the case and all appeals,” Benedictos said.

“We are seeking authority from DSB for suspension of concessions if Thailand will not do what it has to related to the case,” he said.