OIL refiner Pilipinas Shell Petroleum Corp. is pushing for the reduction of Most Favored Nation (MFN) tariff rates on crude from 3 percent to 0 percent.
In a position paper submitted to the Tariff Commission, Shell said failure to reduce the MFN rates for crude from non-Asean states would create an uneven playing field for the refiners and the finished product importers.
Keeping the MFN rate at 3 percent for non-Asean crude, even when the Asean Trade in Goods Agreement (Atiga) takes effect in January, would give pure product importers an undue advantage and ?will eventually result (in) the decimation of the local refinery business.?
Shell said this would result in a ?negative tariff differential? that would make the Philippines less competitive in the global market.
While others would enjoy duty-free importation of pure petroleum products, local refiners would be slapped a 3-percent levy on crude.
This will discourage further investments in oil refining.
Also, the Downstream Oil Industry Deregulation Act of 1998 requires uniform tariff treatment on imported crude and finished petroleum products, Shell said.
The uniform rates, it added, referred to MFN rates and not those provided under various free trade agreements.
?By principle, FTAs will always discriminate against products from non-FTA members. As in the case of Atiga, petroleum products from non-Asean countries will be discriminated (against), compared to those products coming from Asean countries. This is the purpose of FTAs?to promote free trade among member countries, and there seems to be nothing illegal with such direction under current laws,? Shell said.
?However, notwithstanding the nature of FTAs, the present situation brought about by Atiga effectively discriminates against refiners who import crude as its raw materials to manufacture finished petroleum products from non-Asean countries, such as the Middle East. This discriminatory treatment may be seen as effective ?tariff distortion,? which impairs or affects national interest,? it added.
