Tariff Commission rules out extension of safeguard duties on cement imports

MANILA, Philippines — The Tariff Commission (TC) has recommended the non-extension of safeguard measures for the importation of two types of cement, saying that there is no imminent threat of serious injury to the domestic cement industry.

“The Commission recommends that the imposition of the definitive general safeguard measure on importations of Ordinary Portland Cement Type 1 and Blended Cement Type 1P no longer be extended,” the TC said in its final report on the formal investigation on the petition for extension of safeguard measures against the importation of the two types of cements from various countries.

The investigation was a result of a petition filed by the Cement Manufacturers Association of the Philippines (CeMAP).

“The domestic cement industry has undertaken, and continues to undertake, considerable efforts to comply with its adjustment plans and is thus making positive adjustments to import competition,” the TC said.

It explained that during the period under review from 2019 to 2021, the domestic cement industry maintained its market standing, increased its mill capacities, stabilized its manufacturing costs, and improved its profitability.

The TC pointed out that the domestic cement industry was profitable as its income from operations bounced back in 2021 to pre-pandemic levels of P13 billion, adding that return on sales was stable at 13 percent, attributable to successfully executed cost-cutting and productivity-enhancing industry measures

“During the period under review, there was no significant overall impairment in the position of the domestic cement industry that constituted serious injury,” the TC said.

“There is no existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future,” it said.

In 2019, the Department of Trade and Industry (DTI) issued Department Administrative Order (DAO) 19-13 imposing a general safeguard measure on cement imports for a period of three years after the TC’s probe found a causal link between increased cement imports and threat of serious injury and impairment to the domestic cement industry.

Under Republic Act 8800 or the Safeguard Measures Act, the government may impose a safeguard duty to provide relief to domestic players hurt by a surge in imports.

The TC said the non-extension of the safeguard measure on cement would prevent price increases in both local and imported cement which, in turn, would lead to positive spillover effects on the growth of the construction industry, which has a high contribution to gross capital formation.

“Stable construction costs, from stabilized/lower cement prices, would encourage capital investments, support an enabling business environment, and ultimately be economically beneficial,” it said.

The TC emphasized that a healthy market competition would force the local industry to continue to upgrade its technological knowhow and manufacturing facilities, bolster operational efficiencies, reduce costs, and fill the unserved demand.

“On the other hand, a safeguard measure could deter exports and the entry of market players and would thus ultimately deprive consumers/end-users of competitive cement prices,” it said.

It added that the presence of imported cement would provide competitive discipline and discourage rent-seeking behavior and possible abuse of market power.

“Continuing exposure to price and quality competition from imports will redound to the domestic industry in the long-term as it gains international competitiveness from the implementation of indispensable efficiency measures,” the TC said.

Data from the TC showed that imports of Type 1 and Type 1P cement increased by 11 percent from 2019-2020, and by another 16 percent in 2020-2021 when safeguard measures were in place.

In the first half of 2022, imports stood at 3.51 million MT, seven percent higher compared to the 2019-2021 half-year average.