Plastics producers buck safeguard duty on imported raw material

Published July 4, 2022, 5:02 PM

by Bernie Cahiles-Magkilat

Domestic plastics manufacturers said they were “appalled” by the decision of the Tariff Commission to grant safeguard duty on imported high density polyethylene (HDPE) pellets and granules for three years is unfair because it will only benefit one entity as against the small downstream plastic producers.

In a statement, the Philippine Plastics Industry Association (PPIA) stressed that the findings of the TC of “imminent occurrence of serious injury” only pertains to one single entity, which the group said posted healthy net income during the period of investigation and even embarking on expansion programs.

PPIA said the TC recommendation “is not fair to the downstream industry who are expected to suffer from any decision favoring the request.” The group was referring to the safeguard duty petitioner Gokongwei-owned JG Summit Olefins Corp., the country’s sole producer of HDPE pellets and granules.

HDPE is raw materials for downstream plastic manufacturers used in film extrusion process, injection molding process, blow molding process, pipe extrusion process, and monofilament extrusion process and their respective applications and are like products to imported HDPE pellets and granules under AHTN 2917 subheading 3901.20.00 which are intended for the same processes and applications.

The TC decision issued on June 29, 2022 did not specify the exact amount of safeguard duty that could be imposed on imported HDPE pellets and granules from various countries. The TC findings, however, will be elevated to the Secretary of Trade and Industry for finality, that may include the amount of

“We implore the TC to consider their position and the DTI to not impose safeguard duties on HDPE resin,” PPIA said.

PPIA criticized the TC recommendation reiterating this will only benefit a sole producer, at the expense of the downstream manufacturing industry dominated by MSMEs and employing hundreds and thousands of Filipinos, increase the cost of packaging materials and plastic products and add to the increasing inflation amidst the current crisis faced by our country.

“Such a move will also result in tariff distortion where cheaper imported finished products will continue to proliferate the market,” the group added.

In addition, PPIA said the findings in the TCs investigation report are not consistent with the facts presented during the hearings and submitted in the form of position papers.

According to the PPIA, the increased imports during the period of investigation is attributed to the lack of domestic supply and operational shutdowns result in from the expansion of JGSOC, and the increased demand for products that they do not produce.

“It is wrong to ascertain that the locally produced HDP using its UNIMODAL technology will produce ‘like products’ compared to Bimodal production systems that make the material stronger,” the group said.

For example, PPIA said, the construction industry experienced a significant growth during the period of investigation and while JGSOC claims to have equivalent grades for PE100, their products have not qualified to meet the mandatory quality and performance tests, pursuant to the Philippine National Standards and Water Utility Companies who use them.