DTI mulls imposition of safeguard duty on vehicle imports

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Trade secretary Ramon Lopez
Trade secretary Ramon Lopez

The Department of Trade and Industry (DTI) is looking at imposing safeguard duties on importation of vehicles to help local manufacturers. The announcement follows news that Honda Cars Philippines, Inc. will be closing its Laguna plant in March.

Trade Secretary Ramon Lopez said Honda Cars Philippines had to optimize its allocation and distribution of their resources in the region, which led to the decision to close the assembly of Honda City and BR-V models in their facility in Sta. Rosa, Laguna.

“In other words, they may be facing challenges in keeping the cost competitiveness of their local assembly operations,” Lopez said in a statement on February 24.

He explained that Honda’s cost structure of their local car assembly, which has about 380 workers, is basically challenged “and there’s no tariff protection, thus making imports of vehicles as a cheaper alternative.”

“Vehicle imports have been growing, causing injury to local industry, from assembly to the local parts supply network in the country. Thus we really have to study the need to impose safeguard duty and other measures to provide at least a level of support to the local assemblers,” Lopez said.

Republic Act 8800 or the Safeguard Measures Act allows government to put in place safeguard measures in the form of an increase or imposition of duty on the imported product when increased imports cause serious injury to domestic players.

Lopez said DTI will meet with Honda Philippines on February 24 to consider other alternative options so as to minimize the impact of any final decision they will make.

The Philippine Metalworkers Alliance had earlier proposed to impose safeguard duty on imported vehicles as imports increased from 2014 to 2018.

In particular, the country’s imports of motor cars rose to 207,000 units in 2018 from over 153,000 units in 2014.

DTI is also looking to slap tariffs on vehicles imported from Thailand as a retaliatory measure for the neighboring country’s non-compliance with a World Trade Organization ruling that favored the Philippines in a case involving Philippine cigarette exports.

Photo courtesy of DTI