DTI rethinks proposed tariff on imported goods

MANILA, Philippines — The Department of Trade and Industry (DTI) is putting on hold its proposal to impose a five percent tariff on imported products to raise more money for the government’s coronavirus response.

“It will not be pursued for now. We had Technical Committee - Tariff Related Matters meeting last Friday. We need to study carefully the cost-benefit e.g. impacts on costs for businesses and inflation for consumers versus revenue to be generated for coronavirus disease 2019 or COVID-19 fight,” Trade Undersecretary Ceferino Rodolfo said.

TCTRM supports the Cabinet TRM of the National Economic and Development Authority.

Under the proposal, Rodolfo said the DTI wants to slap a five percent tariff on all imported goods, excluding petroleum products.

He said petroleum products are not covered by the proposal as the government has already slapped an additional 10 percent duty on crude oil and refined petroleum products through the issuance of Executive Order 113 earlier this month to help raise funds for COVID-19 efforts.

When the proposal was discussed with other agencies, he said there were concerns on its possible impact on commitments made by the country in international agreements and on inflation.

As the proposal would cover all products and not target specific goods, he said the country would not be considered protectionist for pursuing the move.

In addition, the health crisis calls for government to find ways to raise more income.

“At this point, it can be justified because of the emergency situation,” Rodolfo said.

He added the proposal is not expected to be inflationary since the planned tariff is only five percent.

The government expects to generate around P245 billion once the proposal is approved.

Asked how the proposal would affect vehicles once it is approved Rodolfo said it would depend on many factors, given an ongoing preliminary investigation for the possible imposition of safeguard duty on automobiles and the government’s intention to retaliate against Thailand by imposing tariff on Thai car exports.

If the proposed five percent duty across all products is approved, he said all vehicle imports regardless of source would be slapped with the tariff.

In the event the proposed five percent tariff is approved and government decides to impose a provisional safeguard duty on all vehicle imports, both tariffs would apply.

Should government approve the five percent tariff, impose a provisional safeguard duty on vehicles, and pursue the retaliatory measure, vehicles from Thailand entering the country would be slapped with all three tariffs.

The DTI is conducting a preliminary investigation on the petition filed by workers’ group Philippine Metalworkers’ Alliance for safeguard measure on vehicles as the group claimed higher imports reduced opportunities for the domestic industry to manufacture cars.

In addition, the government is considering imposing tariff on vehicle imports from Thailand as the latter has failed to comply with a World Trade Organization ruling on a cigarette tax case which the Philippines won.