Tariff Commission, what’s going on?

Several inconsistencies can be found in the Tariff Commission report which recommended the end of the safeguard duty on cement particularly in assessing that the threat from cheap imports does not exist.

About 90 percent of the alleged dumped cement imports being sold at cut-throat prices despite the anti-dumping tariff come from Vietnam, which is ramping up the production of mostly state-controlled manufacturers mostly targeting the export market.

Very odd is the complaint raised by Viet businesses that most of the cement is being sold overseas at prices lower than what they pay for.

Its government has directed exporters to pay an additional five to 10 percent tariff on exports of cement and clinker from 1 January 2023 to even out the disparity.

The goal is to bring down local cement prices by increasing supply since the country’s economy is also developing at a robust pace. Domestic prices have been rising over the past six months while export prices have remained level.

Exporters said they face logistical difficulties in shipping cement to the Philippines which is becoming a hot market because of the infrastructure buildup and the uncertainties in China, the consumption of which dropped due to new Covid-19 restrictions and low residential construction activity.

Against a local demand of 65 million metric tons, cement producers in Vietnamese are increasing their output to 108 million MT this year.

While Philippine manufacturers are investing heavily to match up with the threat from cheap imports, the TC concluded that the local industry has made “positive adjustments” against the influx of dumped cement.

It based its conclusion on the following findings:

1) As of 2021, the total cost of the measures in the adjustment plans of the domestic industry amounted to P69 billion, with P66.9 billion allocated in the original adjustment plans and the remaining P2.1 billion for the additional committed measures;

2) The cost of completed measures amounted to P13 billion including the mill expansions and equipment upgrades by Holcim and Republic, construction of additional warehouses of APO and Solid and cost-saving or productivity-improving measures of all four big cement companies;

3) About P54 billion worth or 78 percent of committed measures were delayed by the pandemic;

4) Approximately P1.4 billion were allocated for new measures that are still for implementation; and

5) The remaining P665 million worth of projects were deferred including the purchase of additional equipment.

It even added that “the positive impact of the efficiency measures was negated in 2020 when the Covid-19 pandemic ensued, which caused economic disruptions worldwide.”

Despite the delayed and ongoing programs, the TC still concluded that “with the continuing implementation of its adjustment plans, the local cement industry was able to increase its capacities, stabilize its costs, and improve its financial performance.”

It then jumped to the conclusion that the protective tariff is no longer needed.

The recommendation to end the protection of the struggling cement industry defies logic.

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