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The Bureau of Customs (BOC) will finally impose the provisional safeguard duty on imported ceramic floor and wall tiles to protect domestic industries and producers.

This is after the Department of Trade and Industry (DTI) released Department Order (DO) 19-11, which revised DO 19-06 that implemented the temporary safeguard duty. BOC last July was supposed to implement DO 19-06 through Customs Memorandum Order (CMO) No. 28-2019, but DTI had asked to hold enforcement pending revision of its order.

In response to DO 19-11, BOC issued CMO 42-2019, signed and effective on August 14.

Under DO 19-11, the provisional safeguard duty will be imposed for a period of 200 days, taking effect 15 days after the order is published in two newspapers of general circulation or CMO 42-2019 becomes effective, whichever comes earlier. DO 19-11 was published in the newspaper on July 18.

The duty shall come in the form of cash bonds and imposed in the amount of P3 per kilogram of imported ceramic tiles classified as AHTN (Association of Southeast Asian Nations Harmonized Tariff Nomenclature) Codes 6907.2213, 6907.2214, 6907.2293, 6907.2294, 6907.2313, 6907.2314, 6907.2393, 6907.2394, and 6907.4092.

DO 19-11 excludes AHTN Codes 6907.2123, 6907.2124, 6907.2193, and 6907.2194 “considering that the products falling under the said headings belong to the category of porcelain tiles or tiles with water absorption of less than 0.5% and these are not manufactured by the local industry,” Trade Secretary Ramon Lopez told Finance Secretary Carlos Dominguez III in a letter dated July 9.

The DTI order implements Section 8 of Republic Act (RA) 8800, or the Safeguard Measures Act. The act provides for imposing duty “in critical circumstances where a delay would cause damage which would be difficult to repair, and pursuant to a preliminary determination that increased imports are the substantial cause of serious injury to the domestic industry.”

The temporary safeguard measure is being imposed following a preliminary investigation 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 DTI’s preliminary determination found that “increased imports of ceramic floor and wall tiles have caused serious injury to the domestic industry.”

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.

Importers of ceramic floor and wall tiles originating from a country that is exempt from the provisional safeguard duty shall submit a certificate of origin issued by the authorized agency/office in the source country of manufacture, authenticated by the Philippine embassy/consulate general.

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