Government urged to freeze tariff rates

Manufacturers want the government to freeze tariff rates at 2000 levels across all tariff lines, saying that the selective freeze approved by the Cabinet committee on Tariffs and Related Matters (TRM) would do little to lower production costs unless all tariffs are reduced.

The Federation of Philippine Industries (FPI), an organization of 80 of the biggest manufacturers and manufacturers associations, told reporters that the tariffs on all raw materials not produced locally should be brought down to zero as soon as possible.

FPI president Raul T. Concepcion said government should not favor specific sectors, referring to the decision to continue protecting the automotive and petrochemical industries until 2004.

According to Concepcion, the whole manufacturing sector is in dire straits and government’s tact should be to help ease rising production costs for everyone. "Unless the tariff freeze is across-the-board, wala ring mangyayari dyan,"(nothing will happen here)," Concepcion said.

He explained that aside from raw materials that are not produced locally, government should also bring down to zero the tariffs on other raw materials that are being locally produced but in quantities lower than 10 percent of total domestic demand.

The decision of the TRM was to revise its tariff reduction schedule but the target to bring down tariffs to five percent by 2004 would stay. However, the TRM committee has not made the list of exceptions or specific schedules for every product.

The TRM said the technical working group would review the entire tariff lines in assess this line by line. The only clear decision was that the tariffs on petrochemical products and automotive parts would be retained until

The exceptions would be based on industry positions. If there was a petition for reduction in a certain imported product, it would be reduced if there would be no corresponding objection from local producers or if there are no domestic producers.

Petition for tariff increases would not be entertained but government would maintain the prevailing tariff rates and not reduce these in 2001. The same would apply to products that are produced locally but only in insufficient quantities, unless the intermediate downstream products are covered by a higher tariff than the input.

Imported products that are not produced locally would be reduced as scheduled. Documents from the TRM indicate that government’s tact is to show a downward adjustment from 2000 to 2001 but to keep silent about the rates in 2002. onwards.

In effect, there will be a sudden reduction of tariffs for the two industries at the end of the prescribed period.

The petrochemical industry has a pending request for continued protection until 2010 but the TRM said government would not seriously consider this until the planned construction of the $1-billion naphtha cracker actually materializes.

The TRM, however, did not discuss the petition of the automotive sector to retain the current tariff structure for automotive parts until 2004 and possibly extend the schedule since the World Trade Organization does not require uniform tariffs for automotive until 2020 for developing countries.