The Department of Trade and Industry (DTI) is looking into allegations that steel product importers in the Philippines are colluding with Chinese exporters in misdeclaring products to cut costs.
In a letter, DTI officials requested the Bureau of Customs (BoC) to investigate the trade practices of Chinese exporters.
The DTI was acting on a complaint lodged by the Philippine Iron and Steel Institute (Pisi) and several private steel companies. Pisi claimed such practices threatened the legitimate steel industry’s viability and people’s safety.
Pisi, the umbrella organization of steel associations and companies, informed the DTI and the Board of Investments that 3,072 tons of steel products from China had been misdeclared when the shipment came through Harbour Centre in Manila.
Pisi president Roberto M. Cola said the matter would normally be dealt with at the customs bureau, but Pisi had decided to seek the trade department’s help because the alleged collusion between Filipino traders and Chinese exporters amounted to unfair trade practice that would undermine prices.
“The misdeclaration of semi-finished steel as finished square bars entitles the Chinese exporter a tax rebate of up to 17 percent, thus not reflecting the true value of the commodity,” Cola explained.
Pisi also claimed the steel products from China were of “low quality,” and would only threaten “the lives and safety of the general public.”
Pisi pointed out that there had been at least 13 incidents of major structures in China collapsing over the last 12 months, “raising questions about the quality of the steel products used in their construction.”
Because of this, the local steelmakers urged the government to tighten the inspection standards for steel imported from China.
“This is in addition to charging the correct duties imposed on the steel imports from China, which are priced below the cost of raw materials used by local steelmakers, to the detriment of local producers,” the group added.
Pisi said it also learned that local importers had already placed several orders of cheaply priced steel from China, which would be shipped in by the end of the year.
As a result, Philippine steelmakers are now bracing themselves for a drop in demand for locally manufactured steel once the imports from China—expected to be as much as 20,000 to 30,000 tons of steel billets misdeclared as “square bars”—arrive in October and November.
“If such [a] huge importation floods the market, it will work to the detriment of local steelmakers,” the group said.
Eventually, Cola said, future importation of similar products would lead to the collapse of the legitimate local steel industry.