Manufacturers seek zero tariff on raw materials

Local manufacturers are elevating their lobby for a zero tariff on all raw materials that are not produced locally to the Electronic Coordinating Council (ECC), as the Tariff Commission finalizes the rationalization of the country's tariff structure.

In a letter to the Economic Monitoring Group (EMG) the Federation of Philippine Industries (FPI) said the tariff reduction to zero percent should be discussed by the ECC, the economic superbody that settles major macro-economic policy questions.

FPI secretary general Joseph H. Francia said it has repeatedly made its representations before the EMG where it was directed to cite specific harmonized system (HS) codes to avoid conflicts. Because certain raw materials for one industry could be the output of another, Francia admitted that the reduction of the import tariff to zero percent could be a disadvantage over the long term.

"Our proposal is that only tariff on raw materials not locally produced and are not likely to be produced in the near future should be brought down to zero," Francia said. "We believe that the benefits from this reduction would be far greater than the cost to the economy."

At present the Tariff Commission is resolving request for zero tariffs on raw materials from at least 10 industries including petrochemicals, chemicals and textiles.

The commission's initial reaction was to balk at the proposal especially since the Department of Finance is not likely to support a zero tariff for any product whether or not produced locally.

The Department of Trade and Industry admitted that tariffs could only go as low as three percent because this already represents the administrative costs of handling imports including document processing.