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By Roy Stephen C. Canivel

Trade and In­dus­try Sec­re­tary Ra­mon Lopez has de­cided to fur­ther tax im­ported cars to pro­tect work­ers in assem­bly and man­u­fac­tur­ing plants, a well-in­ten­tioned mea­sure that might be over­shad­owed by its bad tim­ing as it adds an­other bur­den on an al­ready strug­gling in­dus­try.

The Depart­ment of Trade and In­dus­try (DTI) said in a state­ment on Mon­day that it was im­pos­ing a pro­vi­sional safe­guard duty on im­ported ve­hi­cles, which would be in the form of a cash bond amount­ing to P70,000 per unit of im­ported pas­sen­ger cars and P110,000 per unit of im­ported light com­mer­cial ve­hi­cles.

Safe­guard mea­sures are trade reme­dies im­posed by the gov­ern­ment if a surge in im­ports is found to have se­ri­ously in­jured the lo­cal in­dus­try or at least threaten to cause a se­ri­ous in­jury.

While safe­guard mea­sures are not new, this par­tic­u­lar case is un­like any other be­fore it. Safe­guard mea­sures usu­ally in­volved huge lo­cal com­pa­nies that claim to be hurt by too many im­ports. This case, how­ever, was not prompted by big lo­cal play­ers such as Toy­ota, Mit­subishi or Hyundai, which are ac­tu­ally op­pos­ing the safe­guard duty.

On­ the con­trary, it was union­ized work­ers who set the gears in mo­tion for this mar­ket-mov­ing mea­sure, fil­ing a pe­ti­tion for a safe­guard mea­sure back in 2019 through the Philip­pine Me­tal­work­ers Al­liance (PMA).

PMA, which has some 13,000 mem­bers, said the surge in im­ports has been hurt­ing lo­cal jobs in a way that the au­to­mo­tive com­pa­nies them­selves were not. In a global value chain, they ar­gued that a car com­pany that cuts its ve­hi­cle pro­duc­tion so it could im­port in­stead does not feel any sig­nif­i­cant loss.

In the end, the group ar­gued, multi­na­tional com­pa­nies would still ben­e­fit even if they be­gan re­ly­ing more on im­ports. Mean­while, a smaller ve­hi­cle pro­duc­tion means less work for lo­cal work­ers, which could then lead to job cuts.

The DTI’s de­ci­sion, in essence, not only rec­og­nized but even sided with the plight of the work­ers. In its state­ment, the DTI also cited data from the Philip­pine Sta­tis­tics Author­ity show­ing that the jobs in the man­u­fac­tur­ing sec­tor of mo­tor ve­hi­cles saw an 8-per­cent drop in 2018 from 90,275 work­ers in 2017.

Trade and In­dus­try Sec­re­tary Ra­mon Lopez

“The pro­vi­sional safe­guard mea­sures will pro­vide a breath­ing space to the do­mes­tic in­dus­try, which has been fac­ing a surge in im­por­ta­tion of com­pet­ing brands. To clar­ify, im­por­ta­tion is not be­ing banned and con­sumers will still have the op­tions to choose, but im­ported ve­hi­cle mod­els cov­ered by the rule shall have safe­guard im­port du­ties,” he said.

“If we re­call, the dis­con­tin­u­a­tion of the pro­duc­tion of Isuzu D-Max in July 2019 and the assem­bly plant clo­sure of Honda Mo­tors Philip­pines in the first quar­ter of 2020 af­fected lo­cal jobs and the Philip­pine econ­omy,” he added, not­ing that a safe­guard mea­sure may even at­tract car­mak­ers in the coun­try and make more jobs.

Over­all, the do­mes­tic in­dus­try suf­fered de­clin­ing mar­ket shares, sales and em­ploy­ment as in­ven­to­ries ac­cu­mu­lated, the DTI said.

The DTI said it also sus­tained in­creas­ing losses over the pe­riod, which af­fected cash flow and the abil­ity to in­vest. It also has been faced with ex­cess and in­creas­ing pro­duc­tion ca­pac­ity in coun­tries such as Thai­land, In­done­sia and China.

The DTI said im­ports of pas­sen­ger cars in­creased by an av­er­age of 35 per­cent dur­ing the pe­riod of in­ves­ti­ga­tion from 2014 to 2018, with im­ports ex­ceed­ing do­mes­tic pro­duc­tion.

Im­ports of light com­mer­cial ve­hi­cles, which in­clude pick-up trucks, sig­nif­i­cantly in­creased dur­ing the pe­riod from 17,273 units in 2014 to 51,969 units in 2018, the DTI said.

It re­mains to be seen when the pro­vi­sional duty will take ef­fect, but the DTI will still have to is­sue a pub­lic or­der. The duty will be ap­pli­ca­ble while the DTI’s find­ings are be­ing val­i­dated by the Tar­iff Com­mis­sion in 120 days, as cur­rent rules re­quire.

While the com­mis­sion does its in­ves­ti­ga­tion, the pro­vi­sional duty will be paid by the im­porter through a cash bond, which will then be re­turned if the Tar­iff Com­mis­sion does not val­i­date the DTI’s find­ing.

When asked for com­ment, Rey­naldo Ras­ing, sec­re­tary gen­eral of PMA, said they still had not re­ceived a copy of the de­ci­sion, but they wel­come it.

The Cham­ber of Au­to­mo­tive Man­u­fac­tur­ers of the Philip­pines Inc., whose mem­bers ac­count for bulk of the in­dus­try, did not com­ment on the is­sue as of press time.

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