Carmakers seek clear guidelines on tariff rates for CKD imports

Motor vehicle assemblers are increasingly getting agitated at the snail-paced process of establishing clear guidelines on two government executive orders (EOs) issued earlier this year that adjusted tariff rates on automotive parts.

As a result, assemblers have been paying "under protest" their import duties of completely knocked-down (CKD) parts in the last four months.

Assemblers are now paying duties for their CKD shipments at the higher rate of three to five percent under EO 262, instead of the one-to three-percent tariffs under EO 264 which reduced tariffs on automotive parts.

Trade and Industry Undersecretary and concurrent Board of Investments managing head Elmer C. Hernandez said the guidelines will shortly be drafted and this should straighten out the confusion and frustration of local motor vehicle assemblers.

"It is taking some time to create the guidelines but once done, it’s just a question of its appropriate implementation of the two executive orders," Hernandez said.

Assemblers are urging the government to speed up the issuance of the guidelines because they said this has already affected their imports of CKD parts.

The problem surfaced when the government moved to expand the country’s tariff lines to 10,000 from 5,000 to align with the ASEAN Harmonized Tariff Nomenclature (AHTN) because the two EOS were based on the old nomenclature.

However, when the tariff lines were broken down under the AHTN, the new tariff lines on CKD parts carried the higher rates of EO 262.

With the absence of guidelines on the two EOs, the Bureau of Customs (BOC) proceeded to impose CKD parts imports with the higher rates under EO 262.

Hernandez said the BOI previously requested the BOC to follow the conversion table for lower tariffs but the agency’s response was to continue slapping the higher tariff rates until the guidelines are issued.