Constructors raise howl over plan to restrict steel imports

Construction and property development costs are likely to increase if government proceeds with a plan to impose import restrictions on steel products to protect the National Steel Corp.

The Philippine Constructors Association (PCA) said in a statement that both public and private infrastructure will be badly affected by import restrictions on construction inputs since steel products are heavily used in construction and building technology.

PCA executive director Lito Madrasto said the construction companies are confused over government's intent to save the NSC "even if it would mean increasing the cost of vital steel products critical to the construction industry."

"The plan to bail out the NSC comes when the property and construction sectors are showing signs of recovery," Madrasto said, adding that the Department of Trade and Industry (DTI) should balance NSC's interests against the common good.

Government is considering the possibility of invoking the safeguards agreement under the World Trade Organization to be able to impose import restrictions against steel imports to protect the NSC should it resume operations under new owners.

Trade and Industry Undersecretary Lilia Bautista revealed that there were WTO agreements that could be invoked to make this possible, particularly Article 19 of the safeguards agreement under the WTO.

This provision, according to Bautista, allows a country to impose import quota if the industry in question was "under threat", similar to the protection allowed for infant industries under Article 18 of the same agreement.

Madrasto, however, said there should also be a review of this policy relative to its impact on prices.

"The DTI should assess fully the impact of its policy meant to protect NSC or any company with protectionist agenda," he said, adding that an increase in the cost of steel inputs would ultimately mean an increase in the cost of construction of roads, bridges, power plants, irrigation systems, school buildings and housing projects, all vital development projects.

The government, on the other hand, has yet to make a final decision on this proposal and Bautista admitted that the definition of "threatened industries" under the safeguards agreement was loose at best.

She said the government will have to hold discussions with the WTO on how "threatened industries" would be definite in order to determine the actual scope of the protection available under this provision.

According to Bautista, the DTI was initially looking at Section 401 of the Tariffs and Customs Code which allows the imposition of import quota for the protection of local industries under threat from being inundated by cheap imports.

"If ever, however, the protection would be good for only one to three years," Bautista explained. "I don't think the WTO will allow this kind of policy to last indefinitely and besides, we don't want to keep protecting any industry for that long anyway."

Bautista also said the DTI would have to evaluate which steel products would be subject to import restrictions.

Ultimately, Bautista said the imposition of import restrictions would have to first be approved by the National Economic and Development Authority (NEDA) before being presented to the WTO for final approval.