Scrap anomalous Estrada EO, galvanizers urge GMA

The Filipino Galvanizers Institute (FGI) appealed to President Arroyo yesterday to review if not revoke what they describe as an anomalous executive order issued by her deposed predecessor that favors one company to the detriment of the entire steel industry.

The FGI, composed of eight major galvanizers, said EO 237 issued by former President Estrada unjustly favored Steel Corp. since it allowed the firm to secure a highly questionable zero tariff incentive on its hot rolled coil (HRC) importation.

This, according to the FGI goes against the mandate of the Iron and Steel Industry Act (RA 7103) which only allows tariff incentive on imported raw materials such as ore and manganese.

In an earlier statement, Steelcorp justified its zero tariff incentive by arguing that the same is granted in accordance with RA 7103.

FGI counsel Joel Ruiz Butuyan, argued that the Estrada E.O. violated the spirit of the law "when it exempted HRC from tariff when Congress clearly provided that only importation of raw materials such as iron ore may be granted tariff incentive."

This is because HRC is not a raw material but a processed or intermediate steel product as specifically categorized by RA 7103, Butuyan said.

HRCs are produced when raw materials such as iron ore, in mixture with limestone and coal are charged in a blast furnace to produce refined iron ore (or pig iron). This refined iron ore is then remelted in an electric furnace and cast in slab asters to produce slab ingots. These slab ingots are rolled in hot strip mill to produce HRCs and sheets, among others.

Thus, it is clear, Butuyan said, that Steel Corp., is enjoying an undue advantage.

To level the playing field, the FGI urged the present administration "to revoke the patently unlawful executive order issued by deposed President Joseph Estrada which has the effect of giving unfair privileges to Steelcrop."

Butuyan said Steelcorp enjoys an unfair advantage because while it enjoys zero-tariff incentive, its competitors are subject to a three percent tariff on their cold rolled coil (CRC) imports. Both HRCs and CRCs are considered by law as intermediate or processed steel products.

Moreover, not satisfied with its zero tariff privileges, Steelcorp has petitioned the NEDA to increase the tariff rate imposed on its competitors from three percent to seven percent.

FGI sees it as a move to virtually kill the rest of the iron steel industry and install Steelcorp as a virtual monopoly.

"Steelcorp is practically asking for the death of Filipino galvanizers importing CRCs," FGI warn. The organization employs around 5,000 workers.

FGI asked President Arroyo to look into the circumstances that prompted the National Economic and Development Authority (NEDA) and the Tariff and Related matters (TRM) committee under the previous Estrada government to grant the incentive to Steelcorp.

"The error was so obvious that one cannot help but wonder if such an interpretation of RA 7103 was meant to favor some sectors," FGI said.

Instead of helping the local galvanizers survive the economic slowdown, the NE—DA and the TRM Committee move may even hasten the demise of the iron and steel importers and manufacturers, FGI warns.

FGI stresses that unless and until the NEDA and the TRM Committee under the Arroyo administration rectify the unlawful acts of their predecessors the country cannot expect further investments on steel, nor can the Philippines develop a viable iron and steel industry.

"What the country needs right now is a level playing field, an investor’s haven where the law is applied equally and fairly," FGI said.