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The Secretary of Commerce and Industry, Ramón López, has decided to impose more taxes on imported cars to protect workers in the assembly and manufacturing plants, a well-intentioned move that could be overshadowed by its bad timing as it adds another burden. to an already struggling industry.
The Department of Commerce and Industry (DTI) said in a statement Monday that it would impose a provisional safeguard tariff on imported vehicles, which would be in the form of a cash bond in the amount of 70,000 pesos per unit of imported passenger vehicles and 110 pesos. , 000 per unit for imported light commercial vehicles.
Safeguard measures are trade solutions imposed by the government if a sudden increase in imports is found to have seriously damaged local industry or at least threatens to cause serious injury.
While safeguard measures are not new, this particular case is unlike any previous one. Safeguard measures generally involved large local companies claiming to be hurt by too many imports. This case, however, was not driven by large local players such as Toyota, Mitsubishi or Hyundai, who actually oppose the safeguard duty.
Rather, it was unionized workers who put the gears in motion for this market-moving measure, filing a petition for a safeguard measure in 2019 through the Philippine Metalworkers Alliance (PMA).
WFP, which has about 13,000 members, said rising imports have affected local jobs in a way that auto companies themselves were not. In a global value chain, they argued that an auto company that cuts its vehicle production to be able to import instead does not feel any significant loss.
In the end, the group argued, multinational companies would still benefit even if they began to rely more on imports. Meanwhile, smaller vehicle production means less work for local workers, which could lead to job cuts.
The DTI decision, in essence, not only acknowledged but even sided with the plight of the workers. In its statement, the DTI also cited data from the Philippine Statistics Authority showing that jobs in the motor vehicle manufacturing sector saw an 8 percent drop in 2018 from 90,275 workers in 2017.
“The provisional safeguard measures will provide a respite to the national industry, which has been facing an increase in the import of competing brands. To clarify, import is not prohibited and consumers will still have options to choose from, but the imported vehicle models covered by the rule will have safeguard import duties, “he said.
“If we recall, the interruption of Isuzu D-Max production in July 2019 and the closure of the Honda Motors Philippines assembly plant in the first quarter of 2020 affected local jobs and the Philippine economy,” he added, noting that a safeguard measure may even attract the country’s automakers and create more jobs.
Overall, the domestic industry suffered a drop in market shares, sales and employment as inventories accumulated, the DTI said.
The DTI said it also suffered mounting losses during the period, which affected cash flow and investment capacity. It has also faced excessive and growing production capacity in countries such as Thailand, Indonesia and China.
The DTI said that passenger car imports increased by an average of 35 percent during the investigation period from 2014 to 2018, with imports exceeding domestic production.
Imports of light commercial vehicles, which include pickup trucks, increased significantly 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 right will take effect, but the DTI will still have to issue a public order. The fee will be applied while the Rate Commission is validating the DTI’s conclusions in 120 days, as required by current regulations.
While the commission conducts its investigation, the importer will pay the provisional duty through a cash bond, which will then be returned if the Tariff Commission does not validate the DTI’s finding.
When asked for a comment, Reynaldo Rasing, PMA secretary general, said they had not received a copy of the decision yet, but they welcome it.
The Philippine Chamber of Automobile Manufacturers Inc., whose members represent the majority of the industry, did not comment on the issue as of press time. INQ
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