DTI rejects petrochem sector’s appeal for tariff protection

Instead of granting tariff protection to the local petrochemical industry, the government said it would plug the loopholes that have allowed unscrupulous importers to smuggle plastic resins into the country.

Resisting the aggressive lobby of the petrochemical industry for government to raise the tariffs even on petrochemical products that are not being produced locally, the Department of Trade and Industry said it is more inclined to plug the loopholes rather than meddle with the tariff structure.

Trade and Industry Secretary Manuel Roxas II said government has begun reviewing the import declaration procedures identified by industry players themselves as being used for technical smuggling, misclassification and dumping of imported resins.

According to Roxas, government is aware that local petrochemical manufacturers have suffered a significant loss in terms of market share. He noted that government itself has sustained huge revenue losses due to technical smuggling.

Roxas said the Department of Trade and Industry (DTI), the Bureau of Customs (BOC) and the private sector are in constant talks to discuss the necessary amendments to existing procedures with the objective of plugging the loopholes.

The Association of Petrochemical Manufacturers of the Philippines (APMP) has been lobbying for government to raise the tariff on petrochemical products that are not produced locally, from 3 percent to 15 percent, arguing that the tariff heading for these products are being abused by importers.

Instead of properly declaring the imports, APMP said polymers that are available locally are being brought in and declared as products under the three-percent heading to avoid the 15-percent tariff applicable to polymers that are available locally.

Since the BOC has no facility to verify the chemical characteristics of the imports and since they can not be differentiated simply through visual inspection, the misdeclaration is virtually impossible to catch.

According to Roxas, however, raising the tariff would go against the intention of the government’s entire tariff program.

To correct the problem, Roxas said government could monitor leaks in bonded warehouses as well as misdeclaration of the imported polymers, possible only through the improvement of BOC’s capability to analyze imported petrochemical products.

According to Roxas, government has been telling the petrochemical industry to brace for competition as the market gears up for globalization and to revive protection through a tariff increase would only set back the progress the industry has made towards improving competitiveness.