Panel backs zero tariff for cement

By Max V. de Leon
Published frontpage on the June 8, 2007 issue of BusinessMirror

THE Tariff Commission (TC) has ruled against local cement manufacturers and will be recommending to Malacañang the elimination of tariffs on imported cement “to inject more competition to the market.”

A ranking trade official said the commission will forward its recommendation to the Committee on Tariff and Related Matters (CTRM), which will decide if it would be carried for the issuance of an executive order (EO).

The recommendation was made over the objection of the Cement Manufacturers’ Association of the Philippines (CeMAP) and the Fair Trade Alliance (FTA), which separately warned of its adverse results.

The source said the TC’s collegial body composed of chairman Edgardo Abon and his two commissioners recognized the need to bring down to zero the duties imposed on cement, to pave the way for the entry of imported cement at lower landed cost.

After this, the source said it would now be the duty of the Department of Trade and Industry (DTI) to make sure that importers will not be taking advantage of this by just leveling their prices with those of the local manufacturers.

“There should be vigilance on the part of the government,” the official said.

The commission conducted a hearing on May 8 on the petition to eliminate the 3-percent tariff imposed on cement coming from Asean countries and 5 percent for non-Asean members.

It was prompted by complaints from different sectors that the prices imposed by the domestic cement industry, dominated by foreign firms Holcim, Cemex and Lafarge, are too high, reaching as much as P200 per 40-kilogram bag at some point.

The source said the CTRM will discuss how the government will be able to ensure that the tariff elimination will really translate to reduced cement prices.

One way of doing this, the official said, is to tie the importers to an agreement that with the lower landed cost of their imports, they will be selling their products at levels lower than the prevailing prices.

Also, the source said the CTRM will also decide on how long the zero tariff will be in effect or set up a mechanism that would determine when the original tariffs will be reverted.

The commission came up with its decision despite an appeal from the CeMAP for another public hearing, as the group was not properly represented and heard in the May 8 hearing.

CeMAP is also keenly awaiting the findings of the DTI on the investigation it made on the reported overpricing by the domestic industry.

The DTI will compare the operations cost of the industry players with their prices in determining if they are indeed overpricing.

The Fair Trade Alliance (FairTrade), a broad multisectoral coalition advocating trade and economic reforms, opposed the CTRM proposal to allow importation of cement at zero tariff.

FairTrade lead convenor Wigberto Tañada said that manufacturers in China, Taiwan, Japan and other competing countries would be shipping their cement to the Philippines especially when they run out of silos and warehouses to store their quick-hardening cement.

Tañada expressed alarm that cement imports will harvest the benefits of the billion-peso infrastructure program to the detriment of the local cement industry, represented by 10 companies.

There will be unfair competition, Tañada said, because the imports will sell excess production at prices much lower than the prices in their respective countries.

“These excess capacities are targeted for the Philippines because of our fast-growing market for infrastructure building,” Tañada said.

“There is no more room for this quick-hardening surplus cement in their silos and warehouses. The factories in China, Japan and other countries would ship them out at artificially low prices. They have little to lose.”

Tariff body seeks free entry of cement imports
Tariff Commission
Cement Manufacturers’ Association of the Philippines

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