Impending lapse of safeguard measure triggers outcry from local cement makers

Local cement makers have until 22 October, when the safeguard duty expires, to seek a reconsideration of the Tariff Commission recommendation to end the protection on local manufacturers as they seek for an extension saying the law provided for local industries to be protected from unfair competition.

A former Department of Trade and Industry official said that unless a motion for reconsideration is filed, the TC recommendation to lift the protective tariff prevails.

“The DTI cannot reverse. It can only determine the amount if TC confirmed imposition. But if not carried, DTI cannot impose,” the Daily Tribune source said.

He recounted that during the term of Mar Roxas as DTI chief, the agency tried to contest the TC ruling through the Court of Appeals to no avail.

The TC, in a 5 October decision, had recommended the lifting of the safeguard measure against imports of ordinary Portland cement Type 1 and blended cement Type 1P.

The Cement Manufacturers Association of the Philippines pointed out that the domestic industry needs a longer protection to give it more time to complete its adjustment plan.

“Terminating the Safeguard Measure at this time would jeopardize the efforts that have been exerted by the industry which invested significant capital to improve competitiveness, despite the continued increase in import and soaring prices of fuel and power,” CeMAP indicated.

Previously, the TC, in its Final Report on the Monitoring of the Development on the Philippine Cement Industry, stated that the industry has substantially complied with its commitments to make a positive adjustment to import competition and that majority of the measures have been completed and are being implemented to increase productivity and efficiency.

In October 2019, the Department of Trade Industry issued DTI Administrative Order No. 19-13 which imposed a definitive safeguard duty on imported cement from various countries for three years which ends on 22 October.

Citing Bureau of Customs data and the commission’s Staff Report, Holcim Philippines Inc. Vice President for Sustainability Zoe Sibala disclosed that the volume of imported cement continues to increase and at lower prices at the retail level notwithstanding increases in the prices of fuel and energy.

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.

On the other hand, share of imports to domestic production rose from zero in 2013 to 26.09 percent in 2019, rising further to 38.42 percent in 2021.

CeMAP’s data indicate that as of 2021 around 91 percent of cement imports were from Vietnam.

The petitioners also underscored that imports volume grew even if local demand for cement never outpaced domestic supply despite work stoppage caused by the pandemic.

“Imported cement volumes by trader-importers have shown sustained year-on-year increases, notwithstanding the safeguard duties. It is, therefore, necessary that the Safeguard Measure continues to prevent or remedy the serious injury caused by imported cement,” CeMAP underlined.

The local cement industry employs around 42,000 workers and contributes approximately 125,000 additional jobs throughout the value chain.

An estimated P155 billion or close to one percent of the total gross domestic product was contributed by the cement manufacturing industry in 2016.

The percentage is projected to double and directly or indirectly employ 400,000 workers by 2030.

The local cement manufacturing industry pays about P24 billion in corporate and individual income taxes to the government.

Despite being considered a strategic industry, the local cement industry enjoys no tariff protection and since 2013 cement can be imported duty-free into the Philippines.

Among the local players, Republic Cement said it is severely hurting from cheap imports particularly that of ordinary Portland cement Type 1 and blended cement Type 1P from Vietnam.

Republic Cement vice president for Strategy and Business Development John Reinier Dizon said the pricing of its cement was also affected, although pricing is a function of supply and demand.

Dizon maintained that the low prices of imports continue to cause material injuries to Republic Cement, causing production level to decline in 2019 and 2020.

“While we are in favor of the competition, at Republic Cement, we put our customers at the center of our operations. At the end of the day, without our customers, we cannot survive, so we have to be there for them,” Dizon remarked during a faceoff with traders at the TC.

“At Republic Cement, we believe we produce one of the best products in the market through innovation and improving our logistics. So, we are all here trying to serve the market the best we can, but the issue here is the import coming from Vietnam at dump prices that are hurting us,” according to Dizon.

The flood of cheap imports resulted to the domestic makers’ market share to decline by ten percent, from an estimated 85 percent in 2017 to 75 percent in the first half of 2020, based on Department of Trade and Industry records.

DTI also found that cement from Vietnam at dumping prices accounted for 55 percent of total imports from July 2019 to December 2020.

Cheap imports from Vietnam of Type 1 and Type 1P cement reached 5.5 metric tons and 1.2 MT, respectively.

“Since their shares to the total Philippine imports exceeded the three percent negligibility threshold, the volumes of dumped imports of Type1 and Type 1P cement from Vietnam are not negligible at 75 percent and 88 percent, respectively,” the DTI report stated.

DTI subsequently recommended the imposition of a punitive tariff that ends 22 October 2022.

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