House to review tariff on plastic raw materials

The House committee on trade and industry is set to conduct an inquiry in aid of legislation on the possible effects of a reduction or maintenance of current tariff levels on raw materials for plastic products.

Rep. Harry C. Angping of the third district of Manila has filed a resolution urging Congress to conduct an inquiry on the possible effect of either a reduction or a maintenance of the current level on plastic resins.

Under the ASEAN Free Trade Agreement (AFTA), ASEAN member-countries, including the Philippines, have agreed to lower their tariff walls to between zero percent to five percent.

Specifically for plastic resins, the tariff level will be reduced to five percent next year from the current level of 15 percent.

The reduction in tariff rates is expected to lead to cheaper import cost which would enable local manufacturing industries to be more competitive.

Some industry observers, however, said that a lowering of tariff rates on resins would directly affect the local petrochemical firms which are producing the same products.

Earlier, the country’s three existing petrochemical firms petitioned the government to maintain the existing tariff wall up to 2010 to give them more time to be competitive.

Local plastic manufacturers, however, are opposed to the petrochemical firm’s call for continued protection.

The local plastic manufacturers claim that maintaining the current tariff rate of 15 percent could lead to a price distortion where the cost of raw material resins would be much higher than the five percent tariff on finished plastic products.

Local plastic manufacturers warned that they may have to close down if such a price distortion will be allowed.