Local manufacturers worried over gov’t stand on tariff issue

Domestic manufacturers expressed alarm over the possible reversal of government’s decision to freeze tariff rates in 2001 at present levels, following the rejection of their request to lower the tariff imposed on local industries.

The Federation of Philippine Industries (FPI), a powerful lobby group composed of the country’s manufacturing firms, said the manufacturing industry could not withstand a "double whammy" at a time when interest rates are sky-high and the peso is still lingering in historical lows.

In a letter to the National Economic and Development Authority (NEDA), FPI president Antonio Garcia said that should the government recall its decision domestic industries would be hit with even more pressures.

According to Garcia, the Department of Trade and Industry (DTI) went to the extent of announcing the decision of the Cabinet committee on Tariffs and Related Matters (TRM) to freeze tariffs only to do an "about-face."

This after the TRM thumbed down the proposal to reduce to zero the tariff on local industries’ raw materials which are not being produced locally.

However, it was reported that NEDA wanted to reverse the Cabinet decision to freeze tariff rates in 2001 at present levels, a move that has created a rift between the economic body and the DTI.

A TRM source told reporters that with former Trade Secretary Manuel Roxas II now out of the picture, NEDA has renewed moves to recall the decision and push through with the reduction of tariffs as scheduled.

The TRM had agreed to freeze all tariff rates in 2001 on the prodding of Roxas who was acting in support of various industry lobby groups seeking continued tariff protection from imports.

Roxas had pushed aggressively for the postponement of the 2001 tariff reduction schedule although the common position was to still keep within the 2004 deadline for the reduction of tariffs on all imports except sensitive products, to the zero-to-five percent range.

The TRM’s decision was to give the industry and agriculture sector a breather in 2001 and maintain all rates at 2000 levels but this would only mean that the reduction in 2004 would be implemented abruptly.

With Roxas gone, however, the source said NEDA has renewed its opposition to the decision to suspend the scheduled tariff reduction in 2001, asking the TRM to table the policy for another round of discussions.

The source said NEDA was adamant about the suspension and was aggressively opposed to deviating from the country’s commitment to continue the gradual reduction of tariffs on a yearly basis.

The source revealed that the TRM could end up discussing the proposal all over again. He said the decision could be thrown back to the technical working group of the TRM for another round of debate before making its way back to the Cabinet level.

NEDA had been consistently in favor of a gradual reduction in tariffs to allow domestic industries to slowly prepare for the competition with imported goods.

The sudden-death approach, the economic body said, would only lull manufacturers into a false sense of security before being forced to face the shock of competition when tariffs are suddenly dropped as per the schedule of the World Trade Organization.