The provisional safeguard duties on imported vehicles may be recalled after the Tariff Commission issued a staff report denying the Philippine Metals Association’s claim of a surge in imports since 2014.
The body, however, said the staff report might still change as the agency would hold more public hearings before issuing the final report. Industry stakeholders submitted their comments to the staff report on June 15.
A source said the TC was given 200 days to decide on the issue from Feb. 1, 2021 when the provisional safeguard duties were imposed.
Automotive dealers in February started imposing provisional safeguard duties of P70,000 per unit of imported passenger cars and P110,000 per unit of light commercial vehicles, on top of the regular tariffs, following an order from the Trade Department based on the petition of PMA.
Car companies said with the latest report from the Tariff Commission, the safeguard duties deposited in escrow would be reimbursed to buyers once the provisional duties were lifted.
The TC concluded in its report that during the period of investigation, completely built-up passenger cars and CBU light commercial vehicles “were not imported into the Philippines in increased quantities, both in absolute and relative to domestic production.”
It said the increase in the volume of imports of passenger cars and light commercial vehicles from 2014 to 2020 “cannot be considered recent, sudden, sharp and of such magnitude that can be deemed significant.”
The TC is the principal and independent authority on tariff and trade remedies, and a key adviser on non-tariff measures and international trade issues.
Responding to the TC decision, the PMA said the import surge analysis of TC was flawed and should have excluded data of imports from year 2020, as sales in that year were abnormally very low because of the COVID-19 pandemic.
Data submitted by PMA to the TC showed that total imports of CBU motor vehicles were on an increasing trend from 2014 until 2017, but began to decline from 2018 to 2020. Total imports of CBU motor vehicles peaked in 2017 with 306,819,units, of which 78 percent was imported by domestic industry and 22 percent by traders.
The high importation in 2017 was attributed to the anticipation of the market to the implementation of the Tax Reform for Acceleration and Inclusion Law which took effect on Jan. 1, 2018 and the stricter implementation of Euro 4 emission standards.
Imports of CBU motor vehicles went down to 233,346 units in 2018. Imports further fell to 108,770 units in 2020 amid the adverse economic effect of the pandemic.
The PMA said the safeguard measures were needed to protect the Philippine automotive industry and the proceeds from the safeguard duties should help keep more automotive workers employed during the recession.
It said such safeguard measure would stop the disruption in local production and supply created by the surge in imports, a situation exacerbated by the economic downturn that impacted on sales of the local automotive industry.
The group said importation of vehicles hurt local employment.