After losing its bid to get tariff protection on one resin, JG Summit Olefin Corp. (JGSOC) scored victory in securing safeguard duties on another plastic raw material.
The Tariff Commission (TC) in a June 29 report recommended the imposition for three years of the appropriate definitive general safeguard measure on importations of high-density polyethylene (HDPE) pellets and granules to prevent the imminent occurrence of serious injury to the Philippine HDPE industry represented by JGSOC, the sole manufacturer.
The Department of Trade and Industry earlier rejected JGSOC’s application for safeguard duties on low-liner density PE (LLDPE) as the TC noted no surge in imports.
HDPE pellets and granules are intended for the following processes: film extrusion, injection molding, blow molding, pipe extrusion process and monofilament extrusion.
The TC said HDPE pellets and granules were imported into the Philippines in increased quantities both in absolute terms and relative to domestic production starting in the first semester of 2021. The increase in volume of imports was recent, sudden, sharp, and significant enough, the TC added.
While the domestic HDPE industry suffered injury, as evidenced by deterioration in industry market share, sales, and profitability during the period of import surge, the overall impairment in its position was not of a degree that may constitute serious injury.
The TC, however, noted there exists an imminent threat of serious injury and significant overall impairment to the position of the domestic HDPE industry in the near future, as shown by the significant rate of increase in HDPE importations in 2021.
The TC also pointed to the high likelihood that substantially increased imports will continue into the near future.
It added the substantial freely disposable production capacities of top suppliers Malaysia, Thailand, Singapore, and Indonesia in the form of trade diversion from their primary export markets “… indicates a high likelihood of substantially increased exports of HDPE to the Philippines in the near future.”
Based on their investigation, the TC found the significant deterioration in the overall position of the domestic HDPE industry during the period of import surge. This resulted to declines in market share, sales, production, capacity utilization, and profits.
“ There is a direct causal relationship between increased imports of HDPE and the imminent threat of serious injury and significant overall impairment to the position of the domestic
HDPE industry in the near future…Serious injury to the domestic HDPE industry would occur imminently if a definitive safeguard measure against importations of HDPE is not applied,” the TC said.
“Based on its positive determination that domestic HDPE pellets and granules are `like’ to imported HDPE pellets and granules and that HDPE pellets and granules are being imported into the Philippines in increased quantities, and having established the existence of a causal link between the imminent threat of serious injury to the local HDPE industry in the near future and increased imports of HDPE pellets and granules,” the Commission recommended the application of the appropriate definitive general safeguard measure on importations of HDPE pellets and granules to prevent the imminent occurrence of serious injury to the Philippine HDPE industry.
