Enemy from within

For flimsy reasons, the Tariff Commission recommended the anti-dumping duty on cement to end as it incredulously concluded that there is no “imminent threat of serious injury and significant overall impairment” to the local industry.

Among the more astounding findings of the TC to back its submission was that “the Philippines has become an established market for major cement producers Vietnam, China and Taiwan which each have sufficient freely disposable production capacities that will enable them to increase their exports.”

The TC should have defined the “established market” since traders are taking advantage of the failure of the government to effectively protect the local industry to bring in cheap imports.

The TC report covered the imposition of the definitive general safeguard measures on Ordinary Portland Cement Type 1 and Blended Cement Type 1P.

Members of the industry cried for government protection and the former leadership of the Department of Trade and Industry found the threat to the local industry clear and present.

The threat comes mainly from the influx of cement from Vietnam on which safeguard measures were slapped in 2019. The protective shield on the domestic industry expires this month.

Representatives of local cement makers told the Tariff Commission that despite the safeguard measures, the volume of imports has been increasing.

Even with constant innovation and operational improvements that entail huge investments, cheap imports flooded the market regardless of the punitive tariff, which shows that traders continue to realize huge gains despite the additional costs.

“We’re losing revenues, we’re losing volumes despite the operational improvements we have been making,” an executive of a cement maker stressed.

Bureau of Customs data showed the volume of imported cement continues to increase while maintaining low retail prices notwithstanding the increases in the prices of fuel.

On 6 December 2021, DTI imposed an anti-dumping duty on imports from Vietnam: Type 1 cement, $1.02 to $10.53 per metric ton up to 31.9 percent; and Type 1P cement, $1.16 to $12.79 per MT, or up to 29.2 percent of its price.

DTI estimated that these provisional duties will add P2.01 to P25.08 per 40-kilo bag of cement to the import cost but it failed to deter the dumping incidents.

On 9 December of that year, the TC began an investigation at the request of DTI.

The share of imports to domestic production in terms of volume increased steadily from zero in 2013 to 5.3 million metric tons in 2019, increasing further to 6.88 MMT in 2021.

The share of imports, thus, steadily climbed from zero in 2013 to 26.09 percent in 2019, rising further to 38.42 percent in 2021.

Cement Manufacturers Association of the Philippines data indicated that over 90 percent of imports come from Vietnam.

Local manufacturers reported the volume of imports grew even if demand for cement never outpaced domestic supply during the pandemic and after.

The Eastern European conflict also resulted in fuel and energy prices going over the roof.

Fuel accounts for around 70 percent of the cost of cement production. With such conditions, lifting the tariff protection would be like tossing sheep in the lions’ den.

Effective protection from predatory competitors which are responsible for the dumped cement is needed at this time.

Instead, the TC wanted to throw open the country’s doors to the wolves of the industry.

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