Tariff measures on cement and their impact on consumers


 In 2016 , I filed an individual complaint affidavits  against certain cement companies and some of its officers for violation of  the Anti Competition Act. Except for media coverages as well as informal dialogues, the case closure remains open, Now I read that the PCC Chairman is the nominee to be the Social-economic Planning Secretary and concurrently  NEDA director-general. I may raise in his confirmation his possible  non-compliance of the Anti Red Tape Act.

In 2019, the Department of Trade Industry issued DTI Administrative Order (DAO) No. 19-13, which imposed a definitive safeguard duty on imported cement from various countries for three years. The imposition of safeguard measures was meant to be a temporary relief for the domestic cement industry as they undertake actions to become more competitive in the face of trade liberalization.

With the existing safeguard duty ending in October, the Cement Manufacturers Association of the Philippines (CeMAP) saw it fit to seek for the extended protection of the cement industry. Moreover, in 2021, CeMAP also applied for another protectionist measure for allegedly dumped cement from Vietnam.

So far, media coverage has focused on the positions of the local cement and the cement importers. There has been little to no discussion or consideration on the impact of all these protectionist measures on consumers. I am hounded by my experience in 2016 in PCC as well in the Tariff Commission in 2019.

The imposition of definitive safeguard measures, its possible extension, and the imposition of anti-dumping duties are all to the prejudice of Filipino consumers.

Impact on consumers

As early as 2019, Laban Konsyumer has said that the imposition of safeguard measures will only increase prices of cement and ultimately hurt consumers. Even then, Laban Konsyumer showed evidence from no less than DTI’s own price monitoring reports that the retail prices of cement increased by P15-40 per 40-kg bag in a span of three months. The increase was much higher than the provisional safeguard duty of P8.40 per bag that was imposed at that time. More recently, cement prices increased by as much as P20 per bag in the first quarter of 2022.  Again, this is much higher than the current safeguard duty of P8 per bag. Provisional anti-dumping duties were also imposed from December 2021 to April 2021, which was estimated to add P2-25 to the import cost per bag.

CeMAP in a statement in 2019 said that the effect of safeguard duties on prices, if any, shall not be visible.This is clearly not the case as Laban Konsyumer has seen an uptick in retail prices of cement that is much more than the imposed duties.

What is clear is that, through all of these tariff measures, prices have continued to rise and consumers are being denied the opportunity to seek alternative choices of cement at lower prices and better quality.

The Philippine cement industry

Inasmuch as the government may have sought to protect an industry that is crucial to Philippine economic development and recovery, it has been misled, and continue to be misled, to believe that the cement industry suffers greatly because of imported cement. Under the guise of national interest and economic growth, the cement industry bemoans lower prices and profitability as a deterrent to its continued growth. The cement industry is not an infant industry and has received numerous incentives and support from the government for many decades, with the intent of aiding in its development. Yet, time and again, the cement companies have failed to demonstrate their capability to grow into maturity and competitiveness. Investing in the industry and the country seems to be dependent solely on the imposition of tariff measures such as safeguard duties and anti-dumping duties. It would seem that the industry has gotten used to being coddled and made comfortable by the government, even if it means hurting consumers.

Protecting the consumer welfare

The imposition of tariff measures, both safeguard duties and anti-dumping duties, are to the prejudice of Filipino consumers and national interest. In a time of high inflation and financial instability, a rise in a crucial good like cement only serves to make the average everyday consumer more vulnerable. It also puts at risk the government’s ambitious infrastructure program in terms of higher costs and tighter supply.

Trade liberalization and increased market competition benefit the consumers. In a free and competitive market, businesses have greater incentives to lower prices, improve products and services, enhance productivity, and be more responsive to the market. Competition drives businesses to be more efficient and innovative. It replaces inefficient businesses with efficient businesses, thereby creating stronger industries. Moreover, these effects of healthy market competition contribute to the Philippines’ economic competitiveness and, as a result, economic growth. Ultimately, Filipinos will win.