BOC imposes duty on HDPE imports

• The Bureau of Customs started implementing this month a safeguard duty on high-density polyethylene (HDPE) pellets and granules

• The safeguard duty of P1,338 per metric ton for the first year was implemented via BOC’s Electronic-to-Mobile System on December 17

• The BOC order is in keeping with the Department of Trade and Industry’s Administrative Order No. 22-13, which imposes the same on imported HDPE pellets and granules for three years

• DAO 22-13 aims to prevent serious injury to the local HDPE industry

The Bureau of Customs (BOC) began implementing this month an import duty on high-density polyethylene (HDPE) pellets and granules.

The safeguard duty amounting to P1,338 per metric ton for the first year was implemented via BOC’s Electronic-to-Mobile System on December 17, according to BOC Management Information System and Technology Group Memo No. 10-2022 dated December 16.

The duty applies to HDPE classified under the ASEAN Harmonized Tariff Nomenclature (AHTN) 2017 Code 3901.20.00.

The BOC order is in keeping with the Trade and Industry Department’s Administrative Order No. 22-13 of September 30, which imposes the duty on imported HDPE pellets and granules for three years with the aim of preventing injury to the local HDPE industry.

For the second year, the duty will be P1,271 per MT and for the third year, P1,208 per MT.

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

DAO 22-13 took effect upon BOC’s issuance of the relevant customs memorandum order.

Imports of HDPE originating in developing countries listed under DAO 22-13 are exempt from the definitive safeguard levy.

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

Imported HDPE grades specially made for manufacturing wire and cable jackets/coatings are likewise excluded from the definitive safeguard measure. DAO 22-13 notes that the domestic PE industry does not produce HDPE grades that can be used by the wire and cable industry.

Also, HDPE used in rotational molding process applications that generally comes in powder form with a particle size of 500 microns or below, a melt index of 4.0 grams/10 minutes, and a density of 0.93-0.94 gram/cm³, are excluded from the measure as the domestic PE industry does not make such products.

Importers of HDPE originating in a country that is 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 or office in the source country of manufacture, subject to the affixing of an apostille to the document or authenticated by the Philippine Embassy/Consulate General, as applicable.

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

TC 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 top suppliers of the product such as Malaysia, Thailand, Singapore, and Indonesia are diverting from their primary export markets to the Philippines, their important alternative market.

TC noted there a “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.

It 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 also “not expected to cause shortage” of the products covered in the domestic market.

In September 2021, DTI submitted to TC a request for a formal investigation to determine the merits of imposing a definitive safeguard measure on HDPE pellets and granules imports 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 of the two with the latter as the surviving company –alleged in 2020 that “serious injury to the domestic industry was caused by the increased volume of HDPE.

JGSOC accounts for 100% of the total domestic production of HDPE. – Roumina Pablo