Extension of safeguard duty on test linerboards eyed

The Tariff Commission has recommended a three-year extension of the safeguard duties on imported test linerboards to help local manufacturers cope with cheap imports.

At the same time, the extension will give local players more time to implement their adjustment plans and efficiency measures.

The safeguard duty recommended by the Tariff Commission was set at P1,150.60 per metric ton to be implemented starting this month. This is 5 percent lower than the current safeguard duty of  P1,211.15 per MT.

The Department of Trade and Industry imposed a definitive general safeguard duty on imports of test linerboards for three years starting June 2011 up to June 2013.

Test linerboards refer to the basic material, usually made of recycled or waste paper, used in the production of corrugated boxes for the packaging of consumer products.

The imposition of the safeguard duty in 2011 was a result of an industry review conducted in 2011 by the DTI which found that imports from various countries exceeded the threshold allowed by law,  which is 3 percent of total supply.

Following the imposition of this safeguard measure, imports of test linerboard imports fell to almost 5 percent in 2011 from 12 percent in 2010. This gave an opportunity for the local industry to introduce new lightweight test liner grades (KR 125) and continue implementing efficiency measures to increase production.

However, the 5 percent share of imports to total supply is still higher than the threshold. It is feared that the discontinuance of the safeguard duty may result in the surge of test linerboard imports, especially with the excess production capacity in Thailand, Korea, Malaysia and Saudi Arabia.

“The commission recommends that the safeguard measure be extended for another three years for the industry to continue its implementation of the adjustment plans. The completion of the efficiency measures by the industry to reduce cost will  create a favorable environment to make the industry highly competitive against imports,” the Tariff Commission said in its May 22 report.

“The extension  continues to be necessary to prevent serious injury while the industry is making adjustments to import competition given the elimination of tariff rates in various free trade agreements and the oversupply as a result of  the  expansion in capacity and implementation  of new projects in various countries,” it added.

As it is, the arrival of low-priced test linerboards from Saudi Arabia resulted in the slight increase in the share of imports in total supply in 2012.