Accord reached on plan to cut tariff on auto parts

Vehicle batteries may not be included in a planned six-month temporary reduction of tariffs on certain spare parts needed by jeepneys and buses.

Local motor vehicle spare parts manufacturers have raised objections to a proposal to reduce tariffs on motor vehicle spare parts as part of government support to local jeepney and bus operators to prevent them from raising their fares due to higher oil prices.

Local motor vehicle spare parts manufacturers said this could lead to an avalanche of imported spare parts which would affect local spare parts production.

Upon the intervention of government, a tentative agreement appears to be shaping up whereby there would be complete liberalization of imports of spare parts not locally manufactured, while there would be a six-month temporary reduction of tariffs on specified spare parts needed by local jeepneys and buses.

Batteries, which are not frequently used anyway, would not be included in the tariff reduction.

Spare parts to be covered by the temporary tariff reduction reportedly include rubber hoses, pneumatic timers, tempered safety glass, oil filters, radiators, wiring harness, shock absorbers and a few others.

At present, the prevailing Most Favored Nation (MFN) tariff rates for spare parts range from three to 15 percent.

Under the World Trade Organization (WTO) mandate, MFN rates on spare parts are supposed to be eventually brought down to zero to three percent.

The Philippines’ participation in the Common Effective Preferential Tariffs-ASEAN Free Trade Area (CEPT-AFTA), has already resulted in tariffs in the region at zero to five percent.

But while there may be a tentative agreement, the Board of Investments (BOI) is still setting further consultations with various industries that may be affected by the planned reduction in tariffs on spare parts.

The next public hearing has been scheduled on April 4.