DTI junks petition to extend cement safeguard measures

MANILA, Philippines — The Department of Trade and Industry (DTI) has dismissed the petition to extend the safeguard measures on importations of two types of cements following the recommendation of the Tariff Commission (TC).

“The petition for extension of general safeguard measure on imports of ordinary Portland cement type 1 and blended cement type 1P is hereby dismissed,” Trade Secretary Alfredo Pascual said in a Department Administrative Order (DAO) dated Oct. 24.

The definitive safeguard measures imposed for a period of three years, which began on Oct. 22, 2019, expired on the same day this year.

The DTI said it received the TC’s formal investigation report on the petition for extension of general safeguard measures on importations of ordinary Portland cement type 1 and blended cement type 1P from various countries.

“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.

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 from 2019 to 2021,the domestic 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 DTI issued 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 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 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,”the TC said.

It said 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.

In response to the recommendation of the TC, CeMAP executive director Cirilo Pestaño said earlier that the group was saddened by the recommendation of the TC to discontinue the implementation of the safeguard measure upon its expiry.
 “The requested safeguard measure extension was necessary for adjustment plans to be completed in order for the local industry to be ready for global competition,”Pestaño said.

He said the threat of injury to the local cement manufacturing industry remains imminent from neighboring exporting countries that continue to this day to flood the domestic market with imported cement products even with the safeguard measure enforced.

“The local cement manufacturers have diligently made investments necessary to adjust. Most have been completed while others are earmarked for implementation, in-process, or are nearing completion,” Pestaño said, noting that additional new measures have been identified and are in the pipeline by local manufacturers.

“Terminating the safeguard measure prematurely jeopardizes these efforts and undermines the painstaking work of the local cement industry to stay operational during the very difficult months of the still ongoing pandemic, wherein it continued implementing adjustment plan projects, employing jobs, and allying with government and economic stakeholders to jumpstart national recovery”Pestaño said.