BOC applies safeguard duty on HDPE imports

• The Bureau of Customs is implementing a safeguard duty on high-density polyethylene pellet and granule imports to prevent serious injury to the local HDPE industry

• BOC issued CMO No. 02-2023 enforcing a Department of Trade and Industry order to charge safeguard duty on HDPE pellets and granules for three years

• The safeguard duty for the first year of implementation is P1,338 per metric ton

The Bureau of Customs (BOC) is applying a safeguard duty on high-density polyethylene (HDPE) pellet and granule imports to prevent serious injury to the local HDPE industry.

BOC issued Customs Memorandum Order No. 02-2023 dated January 11 enforcing the Department of Trade and Industry’s order on September 30, 2022 to impose definite safeguard duty on HDPE pellets and granules from various countries for three years.

DTI’s DAO 22-13 took effect upon BOC’s issuance of CMO 02-2023.

The safeguard duty for the first year of implementation amounts to P1,338 per metric tons. BOC’s Management Information System and Technology Group in a memo dated December 16, 2022 said the safeguard duty for the first year was implemented in BOC’s Electronic-to-Mobile System on December 17, 2022.

The safeguard duty will be reduced to P1,271/MT in the second year and to P1,208 in the third year of implementation.

The duty applies to HDPE classified under the Association of Southeast Asian Nations Harmonized Tariff Nomenclature (AHTN) 2017 Code 3901.20.00.

HDPE is used to make plastic bottles, corrosion-resistant piping, geomembranes and plastic lumber.

Imports of HDPE originating in developing countries listed under DAO 22-13 will not be subject to the safeguard measure.

The safeguard measure excludes polyethylene (PE) wax, ethylene acrylic acid copolymer, polypropylene, low-density polyethylene, and polyethylene terephthalate resin.

Imported HDPE grades specially made for use in the manufacture of wire and cable jackets/coatings will likewise be excluded from the safeguard measure.

DAO 22-13 noted that the domestic PE industry currently does not produce HDPE grades that can be used by the wire and cable industry.

Also, HDPE used in rotational molding process applications that are generally in powder form, with a particle size of 500 microns or below, a melt index of 4.0 gram/10 minutes, and a density of 0.93-0.94 grams per cubic centimeter, is excluded from the measure as the domestic PE industry does not produce such products.

Importers of HDPE originating in a country exempt from the safeguard duty and those not covered by preferential tariffs should submit a Certificate of Country of Origin issued by the authorized agency/office in the source country of manufacture, subject to affixation of an apostille to the document or authenticated by the Philippine Embassy/Consulate General, as applicable.

DAO 22-13 is pursuant to the recommendation of the Tariff Commission after its formal investigation found “there exists an imminent threat of serious injury and significant overall impairment to the position of the domestic HDPE industry in the near future.”

It said this is shown by the significant increase in HDPE importations in 2021, “pointing to a high likelihood that substantially increased imports will continue into the near future.”

It said there is also a high likelihood of higher exports of HDPEs to the country in the near future, as the top suppliers of the product such as Malaysia, Thailand, Singapore, and Indonesia are diverting from their primary export markets and with the Philippines being an important alternative market.

The Trade Commission noted “significant deterioration in the overall position of the domestic HDPE market during the period of import surge”, adding that the increase in imports in the first half of 2021 was “recent, sudden, sharp, and significant enough.”

“Serious injury to the domestic HDPE industry would occur imminently if a definitive safeguard measure against importations of HDPE is not applied,” TC said.

The commission said that for the local industry to adequately supply domestic requirements, it needs a level playing field to compete with imports and allow the local industry’s manufacturing base and sales to expand and generate more jobs for Filipinos.

TC added that users of HDPE pellets and granules will retain their option to choose between local and imported products since imports will still be allowed. The imposition of safeguard measure is “not expected to cause shortage” of the products covered in the domestic market.

DTI requested TC in September 2021 for a formal investigation to determine the merits of imposing a definitive safeguard measure on HDPE pellet and granule imports from various countries after its preliminary investigation found “a causal link exists between increased imports of the products under consideration and serious injury to the domestic industry.”

DTI is mandated by Republic Act No. 8800 (the Safeguard Measures Act) to protect the domestic industry from serious injury caused by a surge in imports.

The review came after JG Summit Petrochemical Corp. – now JG Summit Olefins Corporation (JGSOC) after a merger between the two with the latter as the surviving company – in 2020 alleged that “serious injury to the domestic industry was caused by the increased volume of HDPE imports.

JGSOC has a virtual monopoly accounting for 100% of the total domestic production of HDPE. – Roumina Pablo