The Department of Trade and Industry (DTI) is hopeful that the Tariff Commission will still appreciate its data and evidence presented on the imposition of safeguard duty on imported cars and light commercial vehicles to protect the domestic motor vehicle manufacturing sector and save jobs.
Trade and Industry Secretary Ramon M. Lopez said they will submit detailed comments to the TC.
Overall, however, Lopez stressed the need “to look not only at the absolute quantity and value of import surge prior to the pandemic, but also at the relative import surge which is the significant increase in ratio of imports to domestic production, the imports of substitute vehicle models, the injury to industry in terms of plant closures and workers laid off.”
Also, a well-placed source said that DTI’s comments to the TC Staff Report, which ruled that the petition by the Philippine Metalworkers’ Alliance (PMA) has no basis, would hopefully make TC appreciate their position.
“TC's appreciation of data & evidence differs with ours. At any rate the Commission still needs to deliberate on the report and TC still has to consider the views of other parties to the case,” the official said on the very technical analysis of the TC Staff.
One particular bone of contention the DTI raised against the TC Staff Report is on the “like and competitive” products. The TC Staff Report said that only 35 products or tariff lines may be subjected to the safeguard measure instead of the 193 products identified by the DTI because there are similar products manufactured locally that provide competition to these products.
But the source said that there are vehicles in the low end imported sports utility vehicle (SUV) category which are within the price range of locally manufactured high-end minivans. To the vehicle buyer, they can choose between one or the other.
As far as DTI is concerned that is “direct substitutable” but the TC Staff report treated it differently.
In addition, the DTI questioned the “price range” which is the same seating capacity with sports utility vehicles and mini vans.
The source said that if the imported model has a safeguard duty, “There is a good chance the buyer will buy the locally produced, same as for the locally produced pick-ups.”
The DTI noted that in the last few years there have been increases in sales of double cab pick-ups, which took the market share from passenger cars. “That means many potential passenger car buyers decided to buy the imported double cab pick-up trucks instead of buying a passenger cars some of which are locally manufactured, but if there is a safeguard measure on imported pick-ups, potential buyers will think twice before buying the imported mode,” the official said.
In addition, the DTI questioned the use of the 2020 import data stressing that 2020 was an abnormal year because of the pandemic where all imports dropped substantially.
The decline in importation in 2020 reduced the baseline data used in the analysis that probed the import surge from 2014. As such, the TC Staff report concluded that the increase in import volumes were not recent, sharp, and significant enough.
The TC Staff Report, which analyzed the allegation by PMA that import surge has caused serious injury to the domestic motor vehicle manufacturing sector, will be crucial and will be considered by the Commission in its decision, the official said.
“But the Commissioners may disagree and revise some of the findings and conclusions,” the source added. Three Commissioners are going to decide the case.
Should the Commissioners give more weight to the TC Staff Report and oppositors to the case, it will rule against the imposition of permanent safeguard duty. This will then trigger the DTI Secretary, who imposed the preliminary safeguard duty of P70,000 per unit of imported passenger cars and P110,000 per unit of imported LCVs, will be forced to issue and order dismissing the case. But the petitioner PMA can appeal the Secretary’s decision to the Court of Tax Appeals.
The Bureau of Customs started collecting the safeguard duties in the form of cash bond effective February 1 this year. The preliminary safeguard duty is expected to expire around the third week of August this year.