DTI starts reviewing proof of cement dumping

The Department of Trade and Industry (DTI) has started reviewing proof of cement dumping, following the filing last week of a formal complaint by local manufacturers, an official said yesterday.

Acknowledging that close to 1,000 workers had been laid off due to production cuts and mounting losses, the DTI executive said the department is now culling evidence of "gross disparity" between the declared value of Taiwan and Japanese cement imports and the normal value in the countries of origin.

The first proof of dumping is when a country exports products at prices much lower than what prevail in home markets.

The Philippine cement industry has also submitted figures indicating substantial harm done to the local market by the dumped imports, the official said, adding that these would also be reviewed by the department.

The complaint filed by the Philippine Cement Manufacturers Corp. (Philcemcor), on behalf of all 19 local cement producers, focused on exports by two global cement giants -- Taiwan Cement Corp. (TCC) of billionaire Jeffrey Koo and Southern Cross Cement Corp., which gets products from Taiheyo, Japan's largest manufacturer.

The two firms have been flooding the market with products sold at just a third of the average home price, which is around $65 per metric ton in Taiwan and from $70 to $75/MT in Japan.

The DTI official said Philcemcor has alleged Taiwanese cement is coming in with a unit price of $20.99 per metric ton (MT).

"There's a big gap there," the executive acknowledged. "We're now double-checking with Customs officials."

The multinational firm, Morgan Stanley, also placed the average Taipei cement price at $65 per MT in its Investment Research Report on Taiwan Cement, dated June 25, 1998 - during the peak of Asia's financial crisis.

"Logically, given the recovery of most Asian nations, the price of cement should have gone higher -- instead of lower," the DTI executive said, who stressed the need to review other dumping indicators.

"If Philcemcor is right, there is more than enough reason to monitor the entry of Taiwan cement," the official added.

While Philippine commitments to trade liberalization have lifted quantitative restrictions on imports, and lowered tariff levels to just five percent for cement, the country has stressed its determination to protect local manufacturers from dumping and other unfair trade practices, the official said.

"Every nation does this, even the biggest powers. Otherwise, there would be no safety nets, no control to ensure that constituents do not unduly suffer harm," he pointed out.

Philcemcor's complaint, he said, computed TCC's dumping a margin at $41.60/MT - or 199.59 percent - based on the average export price of $20.84/MT compared to the average normal value of $62.45/MT.

The official took pains to differentiate Philcemcor's anti-dumping suit from other tactics of Philippine protectionists sectors.

"Our cement manufacturers are not calling for a halt to imports, or a raise in tariff or other impossible demands," he noted.

"What they want is pretty clear-cut - to establish a case for dumping and impose the proper penalties or controls. What we're doing is reviewing the grounds of the complaint."

He also acknowledged that the Philippine cement industry has staked billions of dollars on the modernization and expansion of production capacity.

Even when the Asian financial crisis struck in 1997, the official noted, cement manufacturers did not back out of their modernization thrust because they wanted to be ready for economic recovery and entry into the Asian and world markets.

Since 1998, however, the deluge of dumped cement imports from Taiwan and Japan has cost both the private sector and the government P10 billion in losses.

Government experts warn that annual losses could double annually unless importers and foreign producers are forced to acknowledge the legitimate price of the threatening products.