Safeguard duty on car imports sought

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    Whittling down. The share of locally-assembled vehicles has gone down significantly, with assemblers choosing to import CBUs from Asean.
    Whittling down. The share of locally-assembled vehicles has gone down significantly, with assemblers choosing to import CBUs from Asean.

    The Department of Trade and Industry (DTI) is studying a petition filed by the Philippine Metalworkers Alliance (PMA) for the imposition of additional duties on completely built-up (CBU) vehicles, citing employment decline in the automotive industry.

    Undersecretary Ceferino Rodolfo, said the DTI, through the Bureau of Import Services, is assessing the application for safeguard duty filed by the PMA last August.

    PMA is a broad alliance of workers in automotive, iron and steel including those employed by the biggest vehicle assemblers in the country.

    In their petition, the group asserted the following provisions of the Safeguard Measures Act: “an increase in the importation of like or directly competitive products; the existence of serious injury or the threat thereof to the domestic industry in particular in production and employment and; there is causal link between increased importation of the product under consideration and serious injury or threat thereof.”

    The safeguard duty targets CBUs under tariff line heading 8703 where data would show the number of imports surged from 153,000 units in 2014 to 207,000 units in 2018, or a cumulative one million units within the five-year timeframe.

    The group cited employment decline both in the assembly and parts manufacturing but figures were not available.

    Looking at the major sources of the importation, Thailand and Indonesia will bear the biggest blow if safeguard duties are imposed, with the two countries accounting for 70 percent of total imports between 2014 and 2018 at 412,000 and 312,000 units, respectively.

    Japanese assemblers have made these countries the hub of their operations in Asean, where they enjoy zero duty access to the region including the Philippines.

    Korea had about 101,000 exports to the Philippines between 2014 and 2018.

    Other sources include Japan, India, the United States, China, Germany, Belgium and Malaysia.

    According to Rodolfo, the technical working group (TWG) on trade remedies will have to convene to look at the application and notify all interested parties, including the automotive assemblers, for their comments.

    He said it may take three months before the TWG can submit a recommendation to the DTI secretary .

    Rodolfo said under safeguard measures proceedings, any positive findings of the DTI will have to be submitted to the Tariff Commission which has its own process, prior to the imposition of a definitive safeguards.

    There has been a reduction in the number of models being assembled in the Philippines.

    Toyota still assembles the Vios and the Innova; Mitsubishi, the Mirage; Nissan, Almera; Honda, City while Isuzu still assembles trucks.

    Latest available data show the proportion of CBU imports in the Philippines jumped from 40 percent in 2006 to 68 percent in 2018.

    This would be the first time the Philippines would deliberate a safeguard duty petition on automotive.