Philippines slaps protective duties vs. car imports

MANILA, Philippines — The Philippines is slapping safeguard duties on imported vehicles starting this month in a move said meant to protect local assemblers. 

In a statement on Monday, the trade department said importers will be required to cough up cash bonds up to P70,000 for passenger cars and P110,000 for light commercial vehicles once tariffs, to be laid out in an order on Tuesday, take effect 15 days after.

The levy will come on top of existing duties paid for by car importers outside Southeast Asia, whose members currently ship in vehicles at zero tariff following the ASEAN trade agreement. Under the plan, new duties will be in effect for 200 days unless otherwise overturned by the Tariff Commission.

In 2015, the latest period on which public data is available, 68% of local auto supply were imported. The trade agency, which based its decision to charge new tariffs on data from 2015 to 2018, said the share of imported vehicles were only bound to increase without the additional duties.  

In making the decision, the trade department was acting on a petition by the Philippine Metalworkers’ Alliance, a labor group composed of roughly 13,000 members, which argued levies are necessary for locally-made vehicles to recover lost ground to importers. However, assemblers belonging to the bigger Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) had opposed the tariff. CAMPI said it would issue a statement on the latest decision.

“They are automakers but also auto importers,” Trade Secretary Ramon Lopez said in a Viber message when asked if car makers were consulted before latest tariffs were imposed.

“We have to base action on what’s provided in the law, which is to provide safeguard duty after establishing injury to local manufacturers which are providing jobs and business to other local auto parts makers as well, which also provide jobs,” he added. 

Carmakers earlier warned the tariffs would result into more expensive vehicles since charges will be passed on to consumers. The bulk of imported cars come from Thailand and Indonesia, but South Korea and Japan, where there are already existing duties, also corner large market shares which means new levies would result into costlier cars.

CAMPI data showed vehicle sales plummeted 42.7% year-on-year to 173,025 units in the first 10 months of 2020.