Home » Customs & Trade, Ports/Terminals » BOC suspends imposition of safeguard duty on ceramic tile imports

The Bureau of Customs (BOC) has put on hold the imposition of provisional safeguard duty on imported ceramic floor and wall tiles.

The suspension was requested by Department of Trade and Industry (DTI) Bureau of Import Services director Luis Catibayan in a letter to Customs commissioner Rey Leonardo Guerrero dated July 8.

Saying that a revised DTI department order (DO) on the temporary safeguard duty is forthcoming, Catibayan requested BOC to hold the implementation of Customs Memorandum Order (CMO) 28-2019 pending instructions from the Finance Secretary on the revised DO.

CMO 28-2019 implements the provisional safeguard duty on imported ceramic floor and wall tiles for 200 days, pursuant to DTI Department Order (DO) 19-06, which implements Section 8 of Republic Act (RA) 8800, or the “Safeguard Measures Act.” The orders are meant to protect domestic industries and producers and promote their competitiveness.

In response to Catibayan’s letter, Guerrero in Customs Memorandum Circular No. 165-2019 and dated July 10 ordered that CMO 28-2019, which was supposed to take effect on July 20, be “held in abeyance.”

Under CMO 28-2019, the duty shall come in the form of cash bonds imposed in the amount of P3 per kilogram of imported ceramic tiles classified as AHTN (Association of Southeast Asian Nations Harmonized Tariff Nomenclature) Codes 6907.2214, 6907.2121, 6907.2193, 6907.2194, 6907.2213, 6907.2214, 6907.2293, 6907.2294, 6907.2313, 6907.2314, 6907.2392, 6907.2394, and 6907.4092.

DO 19-06 was issued following a preliminary investigation initiated by DTI to determine whether increased imports of ceramic floor and wall tiles under several AHTN codes were causing, or threatening to cause, serious injury to the domestic industry. The investigation period was from 2013 to 2017, with updated data for 2018.

DO 19-06 noted that it was “found after preliminary determination that increased imports of ceramic floor and wall tiles have caused serious injury to the domestic industry.”

DTI’s preliminary investigation showed that in absolute terms, the volume of imports of ceramic floor and wall tiles increased from 2013 to 2016. In 2017, imports were lower by 13% from the 2016 level, but higher by 2,170% than in 2014 or the pre-surge level.

In relative terms, the share of imports to domestic production increased from 4% in 2013 to 641% in 2016. In 2017, the share of imports was recorded at 549%, lower by 92% than the 2016 level, but higher by 523% than 2014 or the pre-surge level. In 2018, share of imports was recorded at 542%, lower by 7% compared to 2016 level, but higher by 516% than in 2014.

DTI said the domestic industry has suffered serious injury caused by increased imports because despite significant increases in market size, the market share of domestic manufacturers declined from 96% in 2013 to 15% in 2017 and 2018.

In addition, earnings before interest and taxes exhibited a declining trend of 71% in 2014, a sharp decline of 203% in 2015 when the operations resulted in loss, an increase of 92% in 2016 which meant operation improved compared to 2015 but the industry remained at loss. In 2017, the industry’s operation continued to exhibit losses with the highest decline of 1,067% and further decline of 157% in 2018.

Imports originating from developing countries, as listed in Annex A of DO 19-06, covered by Rule 8.8 of the implementing rules and regulation of RA 8800, shall not be subject to the provisional safeguard measure.

Also, unglazed, porcelain, mosaic, and marble tiles are excluded from the investigation since they are not produced locally.

Further, the preliminary investigation excluded glazed ceramic tiles imported from the European Union since these tiles do not compete with locally produced tiles.

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