Tariff protection for local newsprint industry proposed

The Tariff Commission has recommended the imposition of a definitive safeguard duty of P2,470 per metric ton on imported newsprint, which was found to be causing serious injury to the domestic newsprint industry.

The duty will be imposed from 2015 to 2018.

It was computed by comparing the weighted average landed cost of imported newsprint with the weighted average domestic selling prices of locally produced newsprint in 2013, when import volumes were at their highest, the Tariff Commission said in its report dated Feb. 23.

According to the Tariff Commission, this recommendation stemmed from its findings that the “domestic newsprint industry suffered serious injury from 2012 to September 2014, as shown in the significant impairment in its overall profitability, market position, production, domestic sales, employment, and labor productivity.”

“The commission finds that there was an abrupt and notably sharp increase in the volume of newsprint imported into the Philippines particularly in 2012, both in absolute terms and relative to domestic production. The increase in imports was recent enough, sudden enough, sharp enough and significant enough,” the report stated.

According to the Tariff Commission, the domestic industry’s market position started to erode in 2009 when newsprint imports surged.

Imports came mainly from South Korea, which did not export newsprint to the Philippines in 2007 and 2008, but captured 40 percent of Philippine imports in 2009.

The market share of the domestic industry, it further noted, fell by 22 percent, while imports increased its market presence by 656 percent in 2009.

“The domestic industry lost its market leadership in 2012. Despite attempts of the domestic industry to defend its market position by selling below cost, its sales dropped and the 25 percent increase in apparent demand went to imports,” according to the report.

“The loss in market dominance by the domestic industry constitutes serious impairment of its market position,” it added.

“Landed costs were consistently lower than domestic prices. When the industry’s market share continued to shrink, the industry was forced to adopt import parity pricing in 2011. However, selling below cost increased the losses from domestic operations. In 2011, the industry incurred losses of more than P2,072 per MT. These trends continued in 2012 and the loss worsened to more than P2,743 per MT,” the Tariff Commission noted. Amy R. Remo