Solomonic

The decision of the Tariff Commission not to extend “safeguard measures” imposed on imported cement probably qualifies as Solomonic.

The “definitive safeguard duty” was imposed in 2019 and due to expire this month. In addition to this, an additional anti-dumping duty was imposed specifically on cement imported from Vietnam. These measures were imposed on the basis of strong representations from local cement manufacturers who claimed the cheaper imports threatened the viability of their investments in building domestic production capacity.

In its Final Report on the matter, dated Oct. 5, 2022, the Tariff Commission lifted the customs duties on imported cement. The Commission found that there was no significant overall impairment in domestic manufacturing during the period under review. Furthermore, the Commission found no imminent threat of serious injury to our domestic manufacturers in the near future.

Domestic manufacturers were understandably dismayed. Imports of cement from Vietnam particularly increased rapidly since 2013. They claim this is an existential threat on domestic manufacturing.

The Commission thinks otherwise.

By their own studies, the Commission found that despite increased inflows of imported cement, domestic manufacturers recorded high income from their operations. In 2021, domestic manufacturers bounced back to pre-pandemic levels of P13 billion. Their return on sales was stable at 13 percent. The good performance is due to the cost-cutting and productivity-enhancing measures done by domestic manufacturers.

In sum, the Commission concluded: “There was no significant overall impairment in the position of the domestic cement industry that constituted serious injury.”

The burden of proving serious injury fell on the domestic manufacturers asking for an extension of the safeguard measures. After all, these measures were not the natural state in a fee-market economy and one that is a member of the ASEAN Free Trade Area (AFTA). They were precisely intended as short-term corrective instruments.

Besides, the punitive duties imposed by these “safeguard measures” were ultimately shouldered by the end consumers. They added to the price of the vital product in the domestic market. Having embarked on an ambitious infra modernization program, the biggest consumer of cement is government itself.

More expensive cement will hinder our efforts to meet the nation’s housing backlog. The past few years, home construction costs spiked.

During the time “safeguard measures” were in place, domestic manufacturers had the opportunity to make their processes more efficient to withstand open competition. If they failed to do enough, it should not be government’s duty to continue protecting them with punitive tariffs that ultimately penalized our own consumers.

The reason our economy lags behind our regional neighbors is that we retained protectionist policies for too long. Our industries did not become competitive. The Tariff Commission thinks we should not continue that mistake.

Baggage

President Marcos’ nominee for the DPWH portfolio failed to win confirmation during the regular cycle. He had to be renominated.

During the confirmation hearings, there were hardly any questions about Bonoan’s integrity and competence. There could be none. The man’s professional reputation precedes him.

There were numerous questions, however, about the widespread corruption in the agency he is nominated to lead. Much of the corruption is attributed to a syndicate that includes a senior DPWH official.

This official is said to be exceptionally skilled in the game of influence and money. Considering the DPWH will be allowed P718 billion in next year’s budget, the stakes are much higher.

The syndicate is said to be able to shape the agency’s budget with ease and hide large sums of money in misleading expenditure items. The practice is, in local parlance, called “parking.” The “parked” funds are then offered to legislators or local executives for projects, provided the preferred contractors are hired.

Our politicians, including those sitting at the Commission on Appointments, are familiar with the practice. It is so widespread that most politicians, at one time or another, must have been offered projects provided they played by the syndicate’s rules.

The racket has been going on under the noses of a string of DPWH secretaries. The syndicate has been skilled in cultivating the patronage of the powers-that-be and offering a “service” that appears beneficial for everyone – except, of course, the taxpayers.

Former secretaries and undersecretaries of the DPWH, motivated by their love for the agency, have been briefing legislators and decision-makers about the workings of this entrenched syndicate. Breaking it up, however, is another matter. The most senior, and most notorious, official involved in this syndicate was once put on floating status but returned with a vengeance.

The syndicate has now become Bonoan’s baggage as he faces confirmation. The legislators with the power to confirm or bypass him make sounds that suggest they want to break the power of this corrupt syndicate. But they beat around the bush, asking the nominee about his familiarity with certain practices in the agency – practices that open many doors to corruption.

It will be fairer if the legislators, who are clearly knowledgeable about how things are done, to name names. They should ask for specific heads to roll and for specific procedures to be changed to contain corruption. So far, it seems, they have been using the Bonoan confirmation hearings to challenge the nominee to fire the people they believe responsible for the corruption going on at this agency.

It will serve the nation best to break up this syndicate whose scale of operations will probably put to shame that notorious Janet Napoles network. But it will also put many politicians in an embarrassing light.