Plastics makers nix safeguard measures on petrochem imports

MANILA, Philippines — The Philippine Plastics Industry Association (PPIA) has appealed to the government not to impose safeguard measures on the imports of raw materials such as high density polyethylene (HDPE) and low linear density polyethylene (LLDPE), arguing that such a move would raise prices of local commodities.

In a statement, PPIA president Danny Ngo said slapping safeguard duties on HDPE and LLDPE imports would bring serious domestic injury by triggering additional price increases on basic consumers’ goods from food, beverage, cosmetics, personal and home care, as well as medicines.

Trade Secretary Ramon Lopez said earlier the DTI “has established the existence of a causal link between increased imports of the products under consideration and serious injury to the domestic industry” based on the agency’s preliminary findings on the petition for safeguard measures filed by JG Summit Petrochemical Corp.

While the DTI did not impose provisional safeguard measures on the HDPE and LLDPE imports, the agency transmitted the case records to the Tariff Commission, which will conduct a formal probe to determine if there is merit in imposing definitive safeguard duties.

Should the government decide to impose safeguard measures on HDPE and LLDPE imports, Ngo said the move would affect 417 plastic downstream enterprises employing more than 23,000 workers.

He also said more than 23,000 consumer products manufacturers employing 343,262 workers and contributing about P1.79 trillion of national output, and the 110 million Filipino consumers, would also be affected by the additional cost.

“The move is very untimely amid the pandemic devastation, as local industries and businesses at present are still recovering from losses,” he said.

He said imposing safeguard duties on HDPE and LLDPE imports would make local industries very uncompetitive against cheaper foreign goods and may force a shutdown of operations as 95 percent of the companies do not have capacity to absorb the unnecessary costs.

Under the Safeguard Measures Act, the government may impose tariffs on imported commodities if a surge in imports of such products cause serious injury to the domestic industry.

Ngo said there was no import surge, but users of the raw materials had to import as a consequence arising from the petitioner’s internal problems.

He said the issue originated from the petitioner itself when it commercially operated its naphtha cracker plant in 2016 to also produce other petrochemical additives, and when it started to fail to deliver the HDPE and LLDPE raw material orders of the downstream sector.

He said the lapses created a shortage of raw materials and disrupted the entire supply chain in the downstream plastic sector.

This alarming situation inadvertently compelled the local plastic converters to source their raw material from stable and steady foreign suppliers so that their production plants will continue to operate, as many have already stopped or been partially operated given the severe raw material shortage, he added.