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BOC sets safeguard duty on PH cement imports until 2021

  • P245 per metric ton (mt) or P9.80 per 40-kilo bag will be the new safeguard duty imposed on cement imported from October 22, 2020 to October 21, 2021
  • The duty will apply to cement classified under Association of Southeast Asian Nations Harmonized Tariff Nomenclature (AHTN) Codes 2523.29.20 and 2523.90.00
  • All district collectors will collect the safeguard duty, monitored by the deputy commissioners of the Assessment and Operations Coordinating Group and Revenue Collection Monitoring Group

Importation of cement from October 22, 2020 to October 21, 2021 will be imposed with a definitive safeguard duty of P245 per metric ton (mt) or P9.80 per 40 kilogram (kg) bag, according to Customs Memorandum Order (CMO) No. 29-2020.

The implementation of safeguard duty on cement importation has entered its second year, with cement imported from October 22, 2020 to October 21, 2021 imposed a safeguard duty of P245 per metric ton (mt) or P9.80 per 40 kilogram (kg) bag, according to Customs Memorandum Order (CMO) No. 29-2020.

Imposition of the safeguard duty on cement imports is intended to continue protecting the local cement industry, and is pursuant to Department of Trade and Industry (DTI) Department Administrative Order (DAO) 20-08, which enforces the second year of implementation.

READ: DTI increases safeguard duty on cement as import volumes rebound

DAO 20-08 takes effect once the relevant Bureau of Customs (BOC) memorandum order is issued or after 15 days of DAO’s publication in two newspapers, whichever comes first.

DAO 20-08 also slightly increased the amount of definitive safeguard duty from the previous plan to impose P225 per MT to P245 per MT, or P9 per 40-kg bag of imported cement to P9.80 per bag. This is to help the local cement industry, whose operations have been affected by the coronavirus (COVID-19) pandemic.

DTI in DAO 20-08 notes that on July 28, 2020, the Cement Manufacturers’ Association of the Philippines (CeMAP) requested DTI to postpone the reduction of safeguard duty of P10 per bag imposed during the first year of the safeguard measure.

CeMAP instead appealed to DTI to add P1 per bag or increase the duty to P12 per bag, equivalent to the provisional safeguard duty and within the recommendation of the Tariff Commission.

The group said that while the safeguard measure slowed down cement imports and helped level the playing field during the second half of 2019, “it was observed that cement imports seem to be bouncing back in the first half of 2020.”

It further said this is due to the higher surplus from countries like Vietnam, lower prices of cement and clinker exports during the second quarter of 2020, and lower freight cost because of lower demand of maritime transport.

Moreover, unlike the Philippines, Vietnam did not impose any hard lockdown and continued to manufacture cement through the pandemic, it said.

DAO 20-08 amends DAO 19-13, which ordered a definitive safeguard duty on imported cement for three years starting 2019, to encourage and challenge the local cement industry to become globally competitive.

The duty will be applied to cement classified under Association of Southeast Asian Nations Harmonized Tariff Nomenclature (AHTN) Codes 2523.29.20 and 2523.90.00.

Through CMO 29-2020 dated December 7, Customs Commissioner Rey Leonardo Guerrero ordered all district collectors to impose and collect the safeguard duty under DAO 20-08.

The deputy commissioners of Assessment and Operations Coordinating Group and Revenue Collection Monitoring Group will monitor and ensure the strict implementation of the safeguard.

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. A yearly review of the definite safeguard measure determines the appropriateness of the safeguard duty.

The Philippine economy sank into deep recession in the second quarter of 2020, with the manufacturing, mining, quarrying, and construction sectors leading this decline, DAO 20-08 notes.

The DAO also finds indications the significant increase in the volume of imports of cement, based on its investigation, “affected the performance of the local industry.”

Import volumes of cement increased in 2019 despite imposition of the safeguard duty in the second half of the year, and volumes from January to August 2020 were already 73% of the total 2019 volumes.

“The condition of competition shows that the market share of locally produced cement was displaced even with the imposition of the definitive safeguard of P250/MT or P10/40 kg bag as the shares of imports in the Philippine market significantly increased resulting to domestic industry’s increased inventory, reduced capacity utilization and incurred decline in profitability,” DAO 20-08 states.

It adds that the pandemic aggravated the overall operation of the cement industry in the first half of 2020, resulting in the closure and slowdown of operations due to quarantine measures implemented and low market demand. The scheduled adjustment plan of the industry was also delayed due to business disruptions resulting from quarantine measures. – Roumina Pablo

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