Tariff body pushes tax on cement imports

The Tariff Commission has recommended to further tax imported cement in defense of multinational cement producers who reportedly were harmed by the surge in imports in recent years.

However, the final decision to whether or not act on the recommendation will still be made by the Department of Trade and Industry (DTI), the same department that filed for the imposition of the safeguard measure in the first place.

A copy of the report was not shared to the media, despite a number of requests. The document also has not yet been published on the website of the Tariff Commission.

Trade and Industry Secretary Ramon Lopez said on Tuesday night that he had received a copy of the recommendation, which he said had set the safeguard duty at P297 a metric ton, or P12 a 40-kilo bag.

This is higher than the provisional safeguard duty imposed by the DTI of P210 a metric ton, or P8.40 a bag in the earlier part of the year, which will remain in effect until Sept. 10.

Lopez, who can still adjust the commission’s tariff rate, said the DTI would review the safeguard duty. Under current rules, he has 15 calendar days upon receiving the report to issue the decision.

Safeguard measures are imposed when a domestic industry has either suffered from a serious injury due to a sudden and sharp increase in imports or even a threat of such harm.

In this case, cement imports surged from 2013 to 2017—the years covered by the investigation—which, according to Lopez, led to the commission’s findings that in part pointed to an “injury to the industry.”

Cement importers will likely appeal to DTI. For one, Philcement, a Phinma company that last year returned to the cement business after a 14-year hiatus, said that the commission’s tariff rate was based on a wrong comparison.

In comparing how importers fared against local producers in terms of total costs, the commission allegedly looked only into the cost of cement when it landed at the port and found it cheaper compared to the price of cement when picked up from a local cement plant.

However, Phinma president and CEO Eduardo Sahagun said that this was “not the total cost” shouldered by importers since the cement would still be transported and stocked in warehouses, incurring other costs such as handling and freight costs.

The issue had triggered questions on the capability of the local cement industry, dominated by multinational companies, to meet the country’s demand through domestic production.

This is the second time a safeguard measure has been considered for the industry after cement manufacturers lost their case for a duty on imports back in 2002.

In one of the public hearings for the current duty, the local units of Taiheiyo, Republic Cement, Holcim Philippines Inc. and Cemex—which collectively account for a large chunk of the domestic industry—said they found it hard to expand given the decline in their profitability.

Holcim, the leading cement manufacturer in the country, reported a profit of P2.5 billion in 2018, slightly lower than its P2.7-billion profit in 2017, and much less than the P6.8-billion profit in 2016.

Eagle Cement Corp. saw its net profit grow by 13 percent to P4.8 billion last year. The recent success of the local company has been cited by importers several times as an argument why imports should not be blamed for the performance of multinational firms.