FairTrade statement on the imposition of Safeguard Measures against the importation of Gray Portland Cement

The Fair Trade Alliance (FTA), established in September 2001, is a broad coalition of labor, industry, agricultural and non-governmental organizations which helps promote, strengthen and defend Philippine industries, agriculture, jobs and livelihoods from the onslaughts of unbridled trade liberalization and globalization.

The petition for safeguards involves matters of public interest which the government must sufficiently and decisively address

The issue of safeguards is an issue crucial to all sectors and domestic producers, not just the cement or construction industry. Safeguards is a globally-recognized safety net.  It has become essential for the survival of Philippine industries, the agricultural sector and local jobs, especially since Philippine tariffs on imported goods have been unilaterally reduced to 0-5%.

Ironically, the unilateral tariff reduction has less to do with our WTO commitments.  They are self-inflicted tariff cuts. A regime of very low tariffs for locally produced goods, aggravated by limited access to safeguards, will be the death knell for Philippine industries, agriculture and Filipino workers and farmers, and ultimately the consumers as well.

The local cement industry is similarly situated as the local ceramic tile and glass industries and as such should be accorded the same remedy

Your honors, the cement industry is in a far worse shape than the ceramic tile or glass industry, both of which were given safeguard measures. In fact the cement industry is facing an even bigger threat of an import surge than these two industries. Regional excess capacities of cement producers from other countries are still high.  Without adequate tariff protection, our meager domestic market is a prime target for dumping.

Even if the efficiency-enhancing measures are now underway, the local cement industry still needs time to fully adjust to the threat of imports, more so with the increase of fuel costs and the continuing decline of the peso.     The modernization and expansion program has been badly affected by the Asian financial crisis and its residual impact, the ensuing peso devaluation, the massive dumping into the country of imported cement in 1999-2002, the present fiscal crisis and the low-level demand recovery that we are experiencing.

There is an urgent need to protect the welfare of the filipino cement workers

More than 3,000 Filipinos leave the country every day, including women, some of whom are degraded by prostitution, trafficking and other violations in their places of destinations. Yet, we have a situation where thousands of cement workers opt to stay and contribute to the country’s economy.  What does the government do to reward their sense of loyalty? We cannot leave the industries they are in vulnerable and unprotected for the sake of free trade.

It is, thus, ironic that we continually import products from countries such as the United States, China, Taiwan, Japan and the European Union.  Yet to balance our trade, our biggest export is not any domestically manufactured product but our most precious human resource – the Overseas Contract Workers.   Yes, our “bagong bayani” should be commended for shoring up the economy.   But these OCWs or OFWs, who number by the millions, are victims of an industrial policy regime that does not care about the survival and growth of local industries.

The cement industry is one of the few solid industries still standing under globalization

The need to assist the cement industry is even made more crucial because it is one of the few industries still standing, after two to three decades of mindless globalization and unilateral liberalization.   Many of the industries such as textile, tire, rubber, wire, shoe, etc. have either collapsed or are in the advanced state of decline.

And yet in the 1960s, the Philippine economy was seen as one of the most promising in Asia. Industrial experts from Korea, Taiwan and other Asian nations would visit the country to try to learn how to produce another “Asian car,” and experts from Thailand and other parts of Southeast Asia came in droves to Los Baños to learn how to “green” the countryside and produce more rice.

To survive global and regional competition, our industries need all the assistance the government can give vis-à-vis industries of other countries which do not hesitate to provide their own industries credit, technology, marketing and other forms of assistance, including higher tariffs.

Further, for our domestic industries to remain going concerns under globalization, they need to modernize by investing on new technology, skills and capacities, for this is the only way they can beat the cheap labor and subsidies of other countries.  And yet, the cement industry, along with the petrochemical industry, is one of the few industries in the Philippines which have invested on modernization.

Without the safeguards, the industry has little incentive to sustain the ongoing modernization.

Importation does not necessarily reduce cement prices

Cement importers have used low prices as a battle cry for the non-impairment of cement imports. Much has been said that it is the consumer who would reap the benefits of having free market forces setting the price. However, history shows us otherwise.

During the height of the import surge, though imports were brought in at an average of P86 because of lower labor, electricity and fuel costs, they were still being sold at an average of P135 – P150 per bag which is the same price range as local cement. The Citizen’s Alliance for Consumer Protection or CACP recognized that the importation of cement has never benefited the Filipino consumer.

In fact, the Tariff Commission itself found in its staff report dated January 2002 that despite the fact that imported cement came in at cheap prices ranging from P58 to P86 per bag, they were still being sold at retail prices equal to or higher than local cement. Imported cement only benefited the importers who made enormous profits from their operations without sharing the benefits with the consumers and the government. How can we explain a situation where 97 workers from one cement plant paid P3.2 million in taxes whereas the 4 biggest importers paid only P950, 000. And this from a minute sample of only 97 workers!  What more if we include the more than 20,000 cement workers and the numerous workers from allied industries dependent on the cement industry?

Free trade and fair trade are not mutually exclusive

It has been argued that the imposition of safeguard measures against the importation of cement would be inconsistent with our WTO commitments. On the contrary, WTO allows countries to use safeguards to protect its national interests. If it were true that the WTO required us to make it difficult to obtain safeguards, why do countries like the United States impose safeguard tariffs on steel and shrimps to defend their industries. Even developing countries like India, Argentina and Ecuador use it against import surges so that their industries can survive the onslaught of imports? There is no reason why we cannot avail of it for ourselves, to keep our own industries.

The Fair Trade Alliance is not averse to free trade for as long as it is fair to the Philippines and to the Filipinos who have suffered long enough. We do not seek protection for every industry but we do make it a point that those countries who take advantage of our low tariffs yet refuse to reciprocate be subjected to exhaustive scrutiny and be made to explain why they seek leniency from our government without an equivalent act from theirs.

The Fair Trade Alliance fears that the cement industry will also go in the way of textiles and tires. We fear the day when our country will be no more than a consuming nation, incapable of creating and producing even for its people.  Incapable of even providing jobs and sustenance to its people.  And instead relentlessly exporting its people to faraway lands where it cannot even protect them.

It is our most ardent appeal that the extension of the safeguard remedy for the cement industry, for it is clearly impressed with Public Interest. It is necessary to protect an industry vital to the Philippine economy and development. The cement industry, for its part, is making a positive adjustment to import competition and must be given ample time to continue its efficiency measures to make it survive and actually become competitive on the face of the imminent and inevitable onslaught of regional threats from countries such as Taiwan, Japan and China.

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  • Founded in 2001, the Fair Trade Alliance (FairTrade) of the Philippines is a broad multisectoral coalition of formal and informal labor, industry, agriculture, NGOs and youth pushing for trade and economic reforms.
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