Manufacturers press for legislated tariff hike

Local manufacturers have decided to go for broke and have lobbied Congress for the legislated increase in tariffs on all imported finished products, including cement, petrochemicals, firearms, consumer electronics and even towels.

The Federation of Philippine Industries, the influential organization of industrial manufacturers in the country, is pushing for an increase in the tariffs on manufactured goods effective for the next two years.

The measure is contained in House Bill 125777 which would amend various tariff headings in the Customs and Tariffs code to increase the rate on manufactured goods.

The proposed bill, now in the House ways and means committee, will cover heading number 11.07 all the way through heading number 93.02 setting the tariff rates on imported goods such as firearms and ammunition, petrochemicals, oleochemicals and chemicals, plastics, auto batteries, consumer electronics, pulp and paper, rubber, wood, beer, tires, textiles, tin cans and various packaging materials.

Sources at the Department of Trade and Industry (DTI) said the cement industry also wants to be included in the list of products and has asked for a 20-percent tariff cover.

Since domestic industries were liberalized, the tariff rates on imported manufactured goods have been steadily declining as per the country’s commitment with the provisions of the ASEAN Free Trade Agreement and the World Trade Organization.

According to the source, the proposed bill would set back the country’s commitments by at least three years when the bill takes effect as planned in 2001.

The measure has already been approved after the third reading at the ways and means committee and is expected to be tossed to the bicameral conference committee at the resumption of the congressional session this week.

The source said both the DTI and the National Economic and Development Authority (NEDA) were opposed to the increase in tariff rates but Congress appeared intent on passing the bill, especially with the elections coming up in May.

Industries have been intensely lobbying for the government to take the so-called sudden-death approach to tariff rate reduction instead of gradually reducing the rates until they reach the prescribed zero to five percent.

NEDA, in particular, has been opposed to the sudden-death approach, saying that domestic industries stand a better chance getting ready for full liberalization if the rates are brought down gradually than if they were suddenly reduced at the end of the WTO and AFTA deadline.

However, the source said much of the proposed amendments made no sense even from a protectionist standpoint, especially in cement.

The source said the Philippine Cement Manufacturers Corp. (Philcemcor)’s lobby for a 20 percent tariff, up from the prevailing five percent, would do little to protect the industry against dumped cement coming from various countries where there is a cement supply glut.

Even at 100 percent, the source said local cement would not be protected if cement is being exported into the Philippines at a dumped price of $20 to $28 per metric ton landed cost when the industry claims domestic production cost to reach $60 per ton. – Des Ferriols